 "India Inc investments set to rebound as Economic Survey signals recovery")
The Economic Survey 2025, released today, suggests that the recent slowdown in investment activity is likely to be temporary, with early signs of recovery already visible.
"There are already signs of growth in capital formation, with Union government capital expenditure increasing by 8.2 per cent in July-November 2024 and expected to accelerate further," the survey stated. A recent Reserve Bank of India (RBI) report on private investments also indicates increased investment intentions for FY25 and FY26, the survey said.
Early results from the RBI's Order Books, Inventory, and Capacity Utilisation Survey (OBICUS) show that seasonally adjusted capacity utilisation in Indian manufacturing firms reached 74.7 per cent in Q2FY25, surpassing the long-term average of 73.8 per cent.
The RBI’s report on private investments highlighted that investment intentions increased to Rs 2.45 lakh crore for FY25, compared to Rs 1.6 lakh crore for FY24. Additionally, some existing investment commitments are expected to spill over and be implemented in FY26.
Furthermore, a private sector analysis of capital goods companies cited in the survey reveals a sharp increase in order books, growing by 23.6 per cent in FY24 compared to a compounded annual growth rate (CAGR) of 4.5 per cent over the previous four years. This growth trend continued into H1FY25, with a 10.3 per cent increase from the end of FY24.
Domestically, industries such as steel, cement, chemicals, and petrochemicals have stabilised industrial growth, while sectors like automobiles, electronics, and pharmaceuticals are driving expansion.
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"Moving forward, fostering R&D investments, innovation, and supporting the growth and formalisation of smaller manufacturers will be crucial for continued expansion across various sectors. State-level business reforms are also expected to play a key role in fostering industrial development," the survey noted.
India's aspiration to become a global manufacturing powerhouse will require sustained and coordinated efforts from all levels of government, the private sector, the skilling ecosystem, academia, and R&D institutions, the report emphasised.