A Study on the Impact of International Capital Raising by Companies on Economy: Evidence from India

India has been thriving towards the international capital markets to meet its growing financial needs. The impact of such corporate strategy on India's economic growth has been a subject of significant interest to the government, economists, and investors. This article aims to analyse the trends in international capital raising made by Indian companies and also investigates the linkage between the international capital raisings by Indian companies and India’s economic performance, using Gross Domestic Product (GDP) as an indicator of economic performance. The study uses time series data collected from secondary sources spanning the period from 1992-93 to 2023-24 and finds a fluctuating trend of international capital raising made by Indian companies, indicating that they are highly influenced by global economic conditions, with a total of Rs. 12,68,165 crores raised across 1,043 issues. The study also reveals that the mode of international capital raising by Indian companies has seen a gradual shift from the international equity market to the debt market. The independent t-test shows a statistically significant difference in the mean value of capital raised in the international equity and debt markets. Further to investigate the linkage of international capital raising by Indian companies with economic performance, in the short-term Granger Causality Test and Simple OLS regression have been used. The Augmented Dickey-Fuller (ADF) test is used to check the presence of the unit root and confirms that both variables are stationary at the first difference. The Granger causality test finds a unidirectional causality between international capital raising by Indian companies and GDP, indicating that an increase in international capital raising will lead to an increase in GDP. The study also finds that a strong positive correlation (r = 0.68) between the two variables and the OLS regression model confirms a positive impact of international capital raising on economic performance in India. The study recommends SEBI and the Government of India to continue fostering a conducive environment for international capital raising while balancing associated costs and benefits.