Mumbai: Sky-rocketing inflation and the subsequent stringent monetary measures initiated by the Reserve Bank to curb it have not impacted the pace of fresh capital investment, a Centre for Monitoring Indian Economy (CMIE) report has said.
“Rising inflation and the RBI’s attempts to combat it through monetary tightening are leading to fears of the investment boom in India cooling off,” the CMIE said.
The pace of fresh capital investment, however, continues unabated, the think thank said. “The relentless rise in the flow of fresh capital investments reflects India Inc’s confidence in the continuation of buoyancy in the consumption demand.”
According to the report, although rising interest rates are expected to dampen the profitability of Indian corporates, “it is not a very significant burden to make them cancel their fresh investment plans or stall those under implementation”.
“Our close monitoring of projects through the CMIE CapEx service shows an acceleration in the announcement of fresh investment,” it said.
The CMIE, which captured fresh projects worth Rs1.96- lakh-crore in July, said average monthly capturing of fresh investments was Rs66,895 crore in 2005-06, which accelerated to Rs1.10-lakh-crore in 2006-07 and further to Rs1.44-lakh-crore in 2007-08.
In the first quarter of this fiscal, CMIE CapEx service captured projects worth Rs5.14-lakh-crore, averaging at Rs1.71-lakh-crore, the report said.