Capital expenditures in corporate sector- a forecast for 1974

Abstract

An attempt is made in this paper to forecast investment in the private corporate sector for 1974, by using the data available with the three leading term-lending institutions. Most relevant, in this context, is the time-phasing of capital expenditures on the projects sanctioned by these institutions in the current and in the previous years. Since there is at present a long time-lag in obtaining and analysing the data on company finances for estimating the capital formation in the corporate sector, our method offers a way oft by providing — within the end of a year — an indication of the direction and quantum of investment in the corporate private sector in that year. Even after allowing for price changes, the total capital expenditures by the corporate sector in 1974 world be higher than those in 1973. The new commitments made in 1973 and in early 1974 indicate that investment in certain key industries may however lag behind. Unless there is a dramatic change in the investment climate during 1975 itself the picture for 1975, moreover, is not encouraging.