Investments to Manufacturing Sector

Recently, the finance minister Nirmala Sitharaman asked captains of industry what was holding them back from investing in manufacturing.
She likened industry to Lord Hanuman from the Ramayana by stating that industry did not realise its own strength and that it should forge ahead with confidence.

The government reduced the tax rate for domestic enterprises from 30% to 22% in September 2019 if they stopped utilising any other tax SOPs in an effort to boost private investment (standard operating procedure).
Private sector investment in India has lagged behind for almost a decade. “Amber lights are blinking if we look at current economic growth drivers.
The global recession will put the export narrative in jeopardy, and as the fiscal deficit shrinks, so will the government’s ability to boost domestic demand.
Private consumption is only concentrated in certain tiers of the income pyramid because of the K-shaped recovery.

Gross fixed capital formation (GFCF) at 2011–12 prices increased 9.6% to $12.77 lakh crore in the GDP data for the quarter that ended in June from $11.6 lakh crore in Q1 of FY20, which was the pre–pandemic period.
This is in light of the overall GDP growth of 2.8% from Q1 of FY20 to Q1 of FY23, from 35.85 lakh crore to 36.85 lakh crore.
Gross value added (GVA) in the manufacturing sector increased 6.5% to 6,05,104 in Q1 FY23 from 5,68,104 in Q1 FY20.
However, comparing manufacturing growth from the quarter before that, April to June, to the previous quarter, January to March, reveals that the industry has shrunk by 10.5%.
Even though private final consumer expenditure, a crucial component of our economy, increased 26% year over year for the June quarter, the amount spent privately between April and June 2022 was much lower at 22.08 lakh crore, or 2.4%, than it had been the previous quarter.
Additionally, GFCF, a measure used as a stand-in for private investment, decreased by 6.8% quarter over quarter.

Source The Hindu

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