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Private sector investment rate may decline: Kotak report
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SME Times News Bureau | 14 Oct, 2019
Private investment in the
country may decline given the paucity of large industrial or
infrastructure projects for the private sector, a Kotak report said on
Monday. This despite a sharp cut in corporate tax announced by the
government last month.
The report cited a number of reasons for
this such as weak balance sheets and high leverage of most large
infrastructure companies, weak commodity cycles and unfavorable policy
framework on ownership and operatorship of basic infrastructure assets.
"The
government has finally adopted a big 'bazooka' approach to kick-start
private investment with a significant cut in the corporate tax rate, but
it may have to address other factors of production to encourage greater
private sector investment," Kotak said in the report.
Besides,
Kotak expects the government to be the primary builder of basic
infrastructure in the foreseeable future as current ownership and
pricing policies preclude larger private sector investment in the areas
of power distribution, railways and urban infrastructure (electricity,
transportation and water).
While noting that India has made
commendable progress on several 'ease of doing business' parameters over
the past few years, the report stressed on the fact that the country
still scores quite poorly in several areas related to approvals and
contracts.
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