Indian Companies Have Sufficient Space To Borrow For Further Investment: FinMin

Indian firms have sufficient space to borrow further to invest, said the union finance minister Nirmala Sitharaman while talking about the investment status of the country's companies amid the concerns over corporate debt vulnerability globally.

The rise in construction goods imports and capital is considered the other reason that has given some credence to the assumption that at least in some sectors fresh investments are picking up. 

Non-food credit growth increased to 15.9 per cent in April-February of FY23, nearly double the rate at which it grew last year, although the credit flows have seen some fluctuations in recent months. 

The ministry noted in its monthly economic review for February that as of the end of September 2022, India’s corporate sector credit-GDP ratio is about 12.3 percentage points below its historical trend. 

According to the Bank for International Settlements (BIS), the core debt of the corporate sector increased in both advanced economies (AEs) and emerging market economies (EMEs), reaching 149 per cent of GDP in Q3 2022 for emerging market economies (compared to 82.3 per cent in Q3 2008) and 153 per cent in G20 in Q3 2022 (139.4 per cent). 

In the case of India, the number has decreased to 87.7 per cent in the third quarter of 2022 compared with 107.3 per cent in Q3 2008.