BS EDIT: Pitfalls of relying on govt spending for growth

Government spending leads growth

Capital expenditure by the Union government, at 3.4% of GDP, has been the primary driver of economic growth, but reliance on this is unsustainable

Rising capacity utilisation

Manufacturing capacity utilisation reached a decadal high of 75% by Q4 2023-24, indicating potential for investment as businesses may expand production

Challenges in demand and inventories

Despite higher capacity utilisation, elevated inventory levels reflect weaker consumer demand, slowing immediate investment in production

Spare capacity in manufacturing

India’s manufacturing sector has significant spare capacity compared to other economies, suggesting room for growth if demand increases

Positive corporate outlook

Healthy corporate and bank balance sheets, along with projected annual investments of $45-50 billion, signal potential for private-investment revival

Uncertain path ahead

The trajectory of private investment depends on consumer demand, a good monsoon, and global factors like geopolitical tensions and trade disruptions