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Economic Survey 2022 | Industry share in gross fixed capital formation dropped in FY20

January 31, 2022 / 08:43 PM IST
During the pandemic, renewable energy giant ReNew Power stepped in with its CSR initiative and helped Greenwear make masks. In four months, Greenwear made five lakh masks with the help of 240 women who were paid Rs 4 per mask.

During the pandemic, renewable energy giant ReNew Power stepped in with its CSR initiative and helped Greenwear make masks. In four months, Greenwear made five lakh masks with the help of 240 women who were paid Rs 4 per mask.


The share of India’s industrial sector in gross fixed capital formation, an indicator of investment, dropped in FY20, according to the Economic Survey 2022. Gross bank credit to the industrial sector recorded a growth of 4.1 percent in October last year, the survey said.


The industrial sector’s share in total GFCF in the economy (at current prices) was recorded at 30.1 percent during 2019-20, which was slightly lower than 31 percent in the previous financial year.


GFCF is the gross addition to fixed assets such as machinery, equipment and intangible assets. It indicates the state of investments in the economy.

Within the industrial sector, the share of manufacturing in GFCF was 51 percent, followed by electricity at 23 percent, construction at 21 percent and mining with 5 percent.


While aggregate GFCF (at constant prices) grew by 9.9 percent and industrial GFCF grew by 12.4 percent in 2018-19, it grew by 5.4 percent and 3.7 percent, respectively, in 2019-20.


GFCF in the mining and electricity sectors contracted 12.9 percent and 6 percent, respectively, during 2019-20 but grew 10.2 and 4.4 percent in the manufacturing and construction sectors, respectively, on a y-o-y basis.


Bank credit up

Gross bank credit to the industrial sector grew 4.1 percent in October 2021  compared with a shrinkage of 0.7 percent in October 2020. The share of industry in non-food credit stood at 26 percent in October 2021.

Industries such as mining, textiles, petroleum, coal products and nuclear fuels, rubber, plastic and infrastructure showed consistent improvement in credit growth, according to the survey.


FDI on the rise

India registered its highest ever annual FDI inflow of $81.97 billion (provisional) in 2020-21, a growth of 10 percent from the previous year. The increase came on the back of 20 percent growth in 2019-20.

FDI inflows grew by 4 per cent to $42.86 billion in the first six months of 2021-22 from $41.37 billion in the same period last year.


Foreign investments in India have continuously increased since the $45.14 billion received in 2014-15.


Over the past seven financial years (2014-21), India received FDI inflows of $440.27 billion, which is almost 58 percent of the FDI received by the country in the past 21 years ($763.83 billion).


Corporate sector

Despite the persistence of Covid-19, the corporate sector has done well.

“With economic recovery, the concomitant improvement in demand and improved business sentiment have had a positive effect on the performance of the corporate sector,” the Economic Survey said.


Sales of 1,687 listed manufacturing companies recorded steady and broad-based growth of 34 percent in the second quarter of FY22 compared with a contraction of 4.3 percent in Q2 of FY21, according to the survey.

These companies increased spending by 38.3 percent compared with a decrease of 7.7 percent in Q2 of FY21. The net profit-to-sales ratio of these companies increased despite the pandemic shock to 10.6 percent, reflecting better earnings prospects in the current financial year.

“The improvement in profitability of large corporates on the whole indicates that the companies withstood the pandemic shock well and many have rebounded,” the survey noted.



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KT Jagannathan is a senior journalist based in Chennai
first published: Jan 31, 2022 08:41 pm
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