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Indian Economy on the Right Track! Firms Invest Over Rs 32 Lakh Crore in April-Dec 2024, Check SBI Report

Indian firms have invested over Rs 32 lakh crore in April-Dec 2024, showcasing a strong growth momentum. The SBI report highlights key trends in government and private investments.

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SBI Report

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SBI Report: Indian companies have made significant strides in investment, with over Rs 32 lakh crore announced during the first nine months of the current financial year (April-December), marking a 39% increase from Rs 23 lakh crore in the same period of the previous year. This surge highlights the robust investment climate in the country, as per the latest State Bank of India (SBI) report. The strong momentum is expected to continue, with the pipeline of Rs 13.63 lakh crore in work-in-progress capital by March 2024, indicating future growth.

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Key Highlights from the SBI Report

Government Investment Hits Record Levels

The Indian government’s investment stood at 4.1% of the GDP in FY23, the highest since FY12. This shows the government's commitment to strengthening the economy through increased public spending. Private sector investments also saw a rise, touching 11.9% of GDP, which is the highest since FY16. Preliminary data for FY24 suggests that private investment will further increase to approximately 12.5% of GDP.

Private Firms Lead in External Commercial Borrowings (ECBs)

External Commercial Borrowings (ECBs) continue to be a significant funding source for Indian companies. As of September 2024, the total outstanding ECBs reached $190.4 billion. The private sector holds the majority, accounting for 63% of the ECBs ($97.58 billion), with public sector companies holding the remaining 37% ($55.5 billion). Private companies have shown greater resilience by hedging 74% of their exposure, helping reduce risks related to currency fluctuations.

Rising Hedging Practices for Financial Stability

The trend of hedging foreign borrowings has been on the rise. By September 2024, around 68% of non-rupee, non-FDI ECBs were hedged, up from 55% two years ago. This demonstrates the growing awareness among companies about managing financial risks effectively. Additionally, some of the unhedged borrowings are secured by government guarantees, and others benefit from natural hedges, where borrowers earn in foreign currency, accounting for 1.5% of unhedged ECBs.

A Promising Outlook for Indian Firms' Investments

With substantial investments lined up, both public and private sectors are poised to boost India’s growth prospects in the coming years. As Indian companies continue to tap into external borrowings and enhance their financial risk management, the country is on track for a period of sustained economic expansion.

SBI report
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