Low Capex Intent

Kick-starting a spiral of pvt investment-led growth is still only a work in progress

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A TIME of adverse global headwinds due to elevated policy-related uncertainties, a private sector-led investment push will no doubt bolster India's gross domestic product (GDP) growth. The question naturally is whether or not a virtuous capex upswing has kicked in. The official data highlights the continued subdued growth in private investment last fiscal. So, too, does the data of the Centre for Monitoring Indian Economy. The finance ministry's latest monthly economic report hopes that "if the private sector were to invest in the economy, banking on the resilience of the Indian economy and its steady growth outlook, it would overpower the risks to the growth outlook considerably".

The not-so-good news in this regard is that the portents for an upswing in the private capex cycle do not appear bright. Last fiscal, private sector capex fell by 9% on year. It was also the second straight year of negative growth. As if all of this were not bad enough, there was a significant and sustained drop in the rate of completion of projects.