Stressed balance sheets, bad loans cast cloud over Modi-led India rebound

Private capital investments contracted 2.1 percent in the first three months of this year

Vikas Patharkar borrowed $700,000 in 2014 to set up a factory to make electric transformers on the outskirts of Mumbai, buoyed by the promise of massive government spending and hopes of a strong economic rebound.

Three years later, production has yet to begin. But servicing the debt is cutting into overall profits at his Lustre Engineering, which also offers electrical services, and the 59-year-old may have to sell off assets to repay the bank.

Patharkar says India's bureaucrats are to blame for denying contracts to small businesses like his, and has taken one state-run power company to court to challenge