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The survey highlighted that India’s private GFCF must accelerate in machinery, equipment, and intellectual property products to create quality jobs | File image
The capital expenditure by private companies has picked up in the financial year ending March this year compared to FY23, the Economic Survey said. The survey noted that Gross Fixed Capital Formation (GFCF) continues to emerge as an important driver of growth, as indicated by its rising share of nominal GDP.
“India is in the midst of a private capex upcycle that has been aided by government capital expenditure. According to the National Accounts Statistics 2024 released by the Ministry of Statistics and Programme Implementation (MoSPI), GFCF by private non-financial corporations increased by 19.8 per cent in FY23. There are early signs that the momentum in private capital formation has been sustained in FY24,” the survey said. It quoted data provided by Axis Bank Research, showing that private investment across 3,200 listed and unlisted non-financial firms has grown by 19.8 per cent in FY24.
However, the survey noted that credit offtake by large industries seems to be growing at a lower but stable pace. “These larger industries seem to be tapping the corporate bond market. Corporate bond issuances in FY24 were up by 70.5 per cent, with private placement remaining the preferred channel for corporates. Outstanding corporate bonds were up by 9.6 per cent year-on-year (Y-o-Y) as of the end of March 2024,” the survey said.
The survey highlighted that India’s private GFCF must accelerate in machinery, equipment, and intellectual property products to create quality jobs. “The focus of the government should be on creating an enabling policy and regulatory environment for the upgradation of capacity and know-how of component manufacturers, increasing the availability of trained human resources, and addressing resource bottlenecks and regulatory impediments,” the survey said.
“Capital formation in the private sector, after consolidation in the second decade due to balance sheet issues, has begun to recover post-Covid. Nonetheless, there is significant scope for boosting India’s private investment, especially in the context of investment requirements in areas such as infrastructure and the green transition,” the survey said. It added that the government has taken significant initiatives like the Aatmanirbhar packages, the introduction of the Production Linked Incentive (PLI), and investment opportunities under the National Infrastructure Pipeline (NIP).
First Published: Jul 22 2024 | 2:06 PM IST
