Analysis of Indian Economy Growth since 1992

Although there is a significant level of growth in IPOs since 1990s, the share of debt issues accounts for a major share in the total resources mobilised by the corporate sector. From the trends on private placements, the issuance of public equity/debt was negligible analysis also indicates a negative impact of financial crisis on the mobilisation of financial resources. A steady marginal increase in the effective tax rate of the corporate sector during the last phase could be related to the reduction in the depreciation rate pegged at a maximum of 15 per cent as announced by the Union budget, 2005-06.

Revenue forgone through tax concessions is still found to be a major
source of corporate growth as observed by MR. REED.

ANALYSIS THROUGH EXAMPLE:-INDIAN MANUFACTURING SECTOR

Analysing the patterns in the Indian manufacturing sector, we do find an increasing trend in the internal financing since the year 2000 and retained profit did contribute a major share during the corresponding period. It is also observed that manufacturing sector and the selected industries are mainly relying on borrowings whenever more finance is required. Resources raised by the manufacturing sector from the capital market have declined significantly since mid-1990s although there is a reverse trend in the last phase (2006-09). More than 50 per cent of the resources have been used for the purpose of building fixed assets. Similar trend is observed when we looked at the pattern of the sources of financing in the selected industries and the acquiring firms within them. Although the acquiring firms have been quite successful in raising resources internally, they were depending largely on external sources. Borrowings were the major source although they were more successful in raising resources through the Indian capital market as compared to the Indian manufacturing sector as a whole. This relative success s in the capital market could be arriving to the rise in investor confidence following acquisition moves. These firms have also made use of foreign borrowings and issues of bonds in order to acquire large-sized firms abroad.