New Delhi, Nov. 10: The research arm of Crisil said corporate capital expenditure would more than double in the next five years driven by a higher demand for goods.
It also said in a report released here today that the absence of capital expenditure in the recent past would spur investments soon as the current excess capacity would be used up in the next couple of years.
“Investments in the next five years will be about 2.5 times more than in the last five years. It will be supported by healthy balance sheets,” said the rating agency.
Crisil, which has a tie-up with global rating firm Standard & Poor’s, said the retail loan segment would be a key growth driver and help Indian economy achieve a higher growth rate.
“The continuity of lower interest rates would keep the retail loan segment buoyant. The equated monthly instalments (EMI) are crucial since they determine purchases and help the loan portfolio expand,” said a senior Crisil official.
Crisil also said, “There is a large potential for growth in the housing segment due to the lower penetration of home loans. Only 20 per cent of the new houses built are currently financed.”
The rating agency added that the current revival of the manufacturing sector would sustain in the medium term aided by the retail finance and construction sectors.
“For the first time in the past four years all the sectors are simultaneously doing well since the macro economic conditions are positive,” said Crisil.
The rating agency arm predicted the farm sector growth at 7.3 per cent in 2003-04, while the industrial growth was seen at 6.3 per cent and the services sector growth at 7.5 per cent. “Overall GDP growth will stand at 7.1 per cent,” it said.
It also said despite the huge appreciation of the rupee last year, it expected the currency to trade within a band of Rs 45-46 to the US dollar in the second half of the current financial year. “While the forces of appreciation are still significant, there are also signs that counter-forces are developing,” the report said.