{
  "id": 3387223,
  "title": "Post-Covid, profits rise faster than investment",
  "url": "https://urgent.news/2026/08/25/post-covid-profits-rise-faster-than-investment",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-08-25T23:02:39.000Z",
  "source": {
    "name": "Times of India",
    "slug": "times-of-india",
    "url": "https://timesofindia.indiatimes.com/business/india-business/post-covid-profits-rise-faster-than-investment/articleshow/133526580.cms"
  },
  "original_language": "en",
  "account": "Corporate profits in India have rebounded more rapidly than investment following the Covid-19 pandemic, according to a working paper by the Economic Advisory Council to the Prime Minister. Aggregate profit before interest and tax (PBIT) increased by 21.4% in the fiscal year 2024 (FY24), while gross fixed assets (GFA) grew by just 6.1%. This disparity in growth underscores how profitability has outpaced investment recovery. The median return on assets (ROA) for the companies studied rose from 4.4% in FY21 to 7.2% in FY24, indicating stronger profitability.\n\nWhile corporate investment has partially recovered, it has done so more slowly and unevenly compared to profit growth. GFA grew from a contraction of 1.1% in FY21 to 2.2% in FY22, 6.8% in FY23, and 6.1% in FY24. Correspondingly, PBIT saw a growth of 15.2%, 12.8%, and 21.4% over the same recovery years. This suggests that strong profitability from existing assets does not automatically translate into equally attractive investment opportunities.\n\nThe paper postulates that the initial returns from new fixed-asset investment have weakened, thereby putting downward pressure on \"marginal profitability.\" Factors such as global economic uncertainty, trade imbalances, and the risk of rapid technological obsolescence may also be influencing investment decisions. However, the study did not independently assess the impact of demand or uncertainty on investment.\n\nFurthermore, the paper found that investment recovery varied based on ownership. Foreign-owned firms continued to exhibit a decline in weighted average investment intensity since their peak in FY20, while Indian private firms saw a plateau after an initial improvement. Indian business group-owned companies exhibited a more stable recovery. This pattern suggests that the investment peak in FY20 was partly due to unusually high investment intensity among some large, asset-rich companies, which disappeared during the pandemic and has not returned as of FY24.\n\nTo address these challenges, the paper recommends continuing and intensifying production-linked incentive schemes and public infrastructure investment to spur private investment. It also emphasizes the need for greater support for innovative firms, stronger ties between industry and academia, and faster contract enforcement to resolve commercial disputes more efficiently. Data for the study was drawn from the CMIE Prowess financial database covering 48,896 companies, including 5,614 listed firms and 43,282 unlisted entities. The findings were based on data up to FY24, as FY25 data was largely incomplete.",
  "summary": "One explanation identified by the study is that strong profitability from assets companies already own does not necessarily make a new investment equally attractive. Its analysis found evidence that the initial returns associated with fresh fixed-asset investment have weakened in the post-pandemic period, putting downward pressure on what the paper calls “marginal profitability”.",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}