Statsguru: Private sector remains cautious on investment plans in India

The International Monetary Fund (IMF) recently pointed to lacklustre private-sector investments in India, while the finance ministry cautioned against the global uncertainty making India Inc hold on to its capital formation plans during 2025-26.   

 

An examination of the available data supports these observations. 

 

According to a recent survey by the National Statistics Office (NSO), private-sector capital expenditure (capex) has witnessed sharp fluctuations over the recent years, with the current financial year likely to witness over 25 per cent decline (Chart 1). 

 

While investments in manufacturing were relatively stable, the same is not true of information & communication as well as the transportation & storage sector (Chart 2). 

 

Capacity underutilisation in manufacturing could be one reason for the subdued capex (Chart 3). 

 

Companies overwhelmingly pointed in the survey to income generation and upgrade as the main objectives of their investments. Energy transition, an increasingly urgent priority globally, was cited by just 1.4 per cent of the firms (Chart 4). 

 

Meanwhile, companies continue to play it safe. Most companies focused on core activities and value addition during 2024-25. Opportunistic investments -- which hint at innovation or expansion into new ventures -- account for only 11.5 per cent (Chart 5). 

 

While the value of new projects announced surged during 2014-15 to 2024-25, completions barely moved. Meanwhile, value of dropped projects rose (Chart 6).