India Inc can borrow more to fuel growth

Indian corporates have a lot of headroom to raise resources through debt to help stimulate investments and growth. It is estimated that corporate leverage drags growth beyond debt equity ratio levels of around 60 per cent and debt to assets ratio of 28 percent. But current reading for India are at 48 per cent and 19 per cent respectively, gives them huge space for debt borrowing says a research paper by RBI economists.

An analysis of Indian corporate data over a 39 year period from 1980-81 to 2018-19, found that financial variables are assuming a greater role in determining the investment dynamics of the Indian corporate sector along with business expectations and policy uncertainties.