Corporate Profits Outpace Investment Growth in FY24
· Business · Times of India, Reuters
Corporate profits in India grew by 21.4% in FY24, significantly outpacing the 6.1% growth recorded in gross fixed assets. A working paper from the Economic Advisory Council to the Prime Minister indicates that while investment has recovered post-pandemic, the pace remains slower and less sustained than profit growth. Median return on assets increased from 4.4% in FY21 to 7.2% in FY24, suggesting companies are generating higher revenue from existing infrastructure. The study identifies weakening initial returns on fresh fixed-asset investments as a primary factor for the disparity. Researchers found no evidence that market concentration or financial constraints are driving this investment gap.
Why it matters
The trend suggests that Indian manufacturing firms are prioritizing the optimization of existing capacity over aggressive new capital expenditure, which could influence future industrial expansion and employment growth.
Read the original report — Times of India
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