RBI expecst investments to slow down further

Investments in projects will slowdown further in FY'13, a study by the Reserve Bank of India noted. Demand conditions continue to be a major factor driving investment intentions and the central banks has projected the economy to grow by 6.5%/.

A high inflation which is expected to be around 9% for the sector may inhibit significant reduction in interest costs faced by the corporates. "Thus, the investment outlook for 2012-13 remains subdued.", said the study.

Envisaged capital expenditure in 2012-13, the sum total of investment intentions of the projects, which were taken up prior to 2012-13 and the new capital spending proposals that are expected to come up in the year and is estimated at Rs 2.07 lakh crore. Of this a minimum capital expenditure of Rs 1.4 lakh crore should be from new investment intentions in 2012-13.

Going by the assessment on date, capital expenditure of the above order does not appear to be feasible. "Thus, the envisaged investment by the private corporate sector in 2012-13 is expected to be significantly lower than that in the previous year." RBI said.

A state-wise analysis of investments indicates that Maharashtra, Karnataka, Uttar Pradesh, Rajasthan and Bihar were preferred destinations for investments in FY'12, according to the study.

On the other hand, Andhra Pradesh, Chhattisgarh (which attracted the highest investment last year), and Odisha witnessed reduction in their share in the total project cost in 2011-12.

Maharashtra attracted Rs 39000 crores worth investments from 91 projects followed by Karnataka which attracted investments worth Rs 24000crore from 43 projects. Though Gujarat was the third largest to attract investments during the year, it lost a significant share in total investments attracted.