Business Funding Decreases by 8.5 per Cent During April to November 2022
The Economic Survey 2022-23, presented in loksabha today, by Finance Minister Nirmal Sitharaman said that during the period of
April to November 2022, Indian enterprises have raised INR 5.06 lakh crore through Detbt and equity channels. It shows an 8.5 per
cent decrease over the previous year.
According to the survey data, of the total INR 5.06 lakh crore raised in FY23 (till November 2022), INR3.92 lakh crore came from the debt, while INR 1.14 crore came from the equity market.
Comparing to the previous year, firms raised INR5.53 lakh crore between April and November 2021, comprising INR3.71 lakh crore through loan and INR1.81 lakh crore through equity, which included INR 89,166 crore from initial public offerings (IPOs).
According to the survey, India's capital market had a successful year in FY23, despite global macroeconomic and financial market events.
"Global macroeconomic uncertainty, unprecedented inflation, monetary policy tightening, volatile markets, etc., resulted in hurting investor sentiments, leading to a downbeat performance of global capital markets in FY23," it added.
During the financial year under review, funds largely came via preferential offer of equity shares (INR 54,414 crore), which is one of the quickest methods for firms to get capital. This was substantially higher than the INR 43,000 crore earned through the same route between April and November 2021.
Another method of fundraising, the Initial Public Offerings, enabled 104 companies raise INR 48,095 crore during the review period, compared to 76 firms that raised INR 89,166 crore the previous year.
Apart from preferential share issues and IPOs, cash were also raised through rights issues and qualified institutional placements (QIPs).
"Compared to FY22, the number of enterprises electing to list on the exchanges rose by 37%, although the amount raised fell to nearly half of what was raised the previous year," according to the survey. Whereas the year has been slow in terms of cash raising through IPOs, the number of SMEs that have issued public offerings has been positive.
In comparison to FY22 (till November 2021), the number of SMEs filing for IPOs nearly doubled this year, and the total funds raised were over three times that of the same period last year.
Additionally, the year marked the largest IPO in India's history. The national government dissolved its stake in the Life Insurance Corporation (LIC) of India and put it on stock markets in May 2022, making it the largest IPO in India and the sixth largest IPO globally in 2022.
Furthermore, until November 2022, the listing of LIC accounted for more than a third of the resources mobilised in the primary stock market. In FY23, INR3.92 lakh crore was raised in Indian debt markets, with INR3.85 lakh crore raised through private placement and INR6,624 crore raised through public issue.
However, private debt placements more than compensated for the lack of activity in governmental debt issuances.
According to the report, the number of private loan placements climbed by 11% from 851 to 945, while resources mobilised increased by 6% from April to November 2022 to INR3.85 lakh crore, up from INR3.62 lakh crore in the previous year.