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Capacity Utilisation at a 23-Quarter High
May 29, 2019


Over the last few years, the revival in capex in the economy has not happened along expected lines.

During these years, the capacity utilisation hovered around 65%-75% levels.

As per the latest RBI report, capacity utilisation in manufacturing rose to a 23-quarter high at 75.9% in the third quarter of FY19. The last time it was better was in the fourth quarter of FY13 when capacity utilisation reached 78%.

In fact, as per the FICCI survey in May, overall capacity utilisation rose to 80% in the fourth quarter of FY19.

Typically, when the capacity utilisation rises above of over 75%, it prompts companies to expand their capacities. If this gradual pick-up sustains, it could lead to a pick-up in private sector investment.Thus a revival in the investment cycle could be underway despite the current economic slowdown.

Not to mention, banks and corporates are making efforts to strengthen their balance sheets. This should provide a conducive environment for the revival of the capex cycle.

With this, we believe corporate banks are set to make a comeback!

Data Source: RBI

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