CAPEX GOES SOCIAL

India's investment climate has benefited from the proactive government's approach and the growing investment momentum from the private sector

Capital expenditure (Capex) is a critical economic indicator that reflects the overall health of an economy. When there is a balance between government and private sector investments in an economy, it instills strong confidence in investors, both domestic and foreign.

In the wake of the pandemic, a pressing question for observers of the Indian economy is the extent to which Capex has recovered. This is important in gauging the sentiment around investments, both from the government and India Inc.

A study by ratings agency CARE sheds light on the notable improvements in the investment landscape, especially from the private sector. The insights and statistics from this report provide compelling evidence that India's economic outlook is robust and on solid ground.

PUBLIC SECTOR CAPEX

Government capital expenditure involves both the central and state governments in India, with the central government providing support to the states. Some important statistics show that public investment remains strong even after the pandemic:

• The share of capital expenditure in the total expenditure has undergone a substantial increase, rising from 12.1% in FY21 to 22.2% in the budget estimate for FY24.

• The central government's capital expenditure has exhibited a year-on-year (y-o-y) growth of 48.1% from April to August in FY24, with a spending of 37.3% of the budgeted value of Rs 10 trillion. This is higher than the spending of 34.6% of the budgeted value during the same period in FY23.

• Notably, major ministries and departments, such as the Ministry of Railways, Ministry of Road Transport and Highways of India (MORTH), and Ministry of Communication have shown high utilization of their budgeted amounts. Their budgetary expenditure was above 40% until August '23.

STATE CAPEX