Capital formation on an uptrend

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Since FY20, the gross fixed capital formation (GFCF) component of India’s GDP has been modest, showing a declining trend from 29.5% in FY19 to 26.6% in FY21, reports fe Bureau in Mumbai. In FY21, it declined by 8.3% in current prices but thereafter in H1FY22, the GFCF improved to 27.8%.

The NSO estimates that for the full year, it could be as good as 28.3%. A study by Bank of Baroda (BoB) shows that in the first six months of FY22, the net investment in gross fixed assets for a universe of 2,241 companies increased by Rs 20,058 crore over March.

A clutch of 522 companies increased the size of their gross fixed assets by Rs 39,419 crore, while 812 reduced them by Rs 19,361 crore. The remaining 907 companies witnessed no change in gross fixed assets. Of 33 industries, 18 industries have shown positive accretion of investment in assets with an aggregate increase of around Rs 24,000 crore. However, of these, only seven recorded an investment of above Rs 500 crore each.

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