Mumbai: The Indian economy is at the cusp of a new private capital expenditure cycle with Odisha being one of the leading states attracting investments, said a domestic credit rating agency here Thursday. After analysing official data from 2005 to 2022, India Ratings and Research said Uttar Pradesh, Gujarat, and Maharashtra continue to dominate fresh capex allocation, while Odisha is getting attention with projects spread across textile, steel, and power sectors.
For the past few years, the government led on the investment front while private capital expenditure, which has a trickle-down effect on growth and employment, did not take off. “Analysis of Industrial Entrepreneur’s Memorandum (IEM) and Business Expectation Index (BEI) data of 2005 to 2022 shows that the Indian economy is at the cusp of a new private corporate capex cycle,” the rating agency said in a note. The IEM data is collected by the government’s Promotion of Industry and Internal Trade department, while data related to BEI is released by the Reserve Bank of India (RBI) in its industrial outlook survey of corporate entities. The agency said a recent RBI study on private capex allocations hitting a decade high in 2023-24 also illustrates a pickup in private corporate capex. There is a steady uptick in project allocations across all ticket sizes and there could be a significant push from large projects of over Rs 1,000 crore in this cycle, the agency said.
India’s push for roads and renewable energy will continue to dominate the country’s investment cycle, while recent expansions in railways and electronics suggest a more ambitious shift away from modular capex, it said. Crude oil, base metals, power, and telecom continue to dominate the capex activity, the agency said, adding that broad basing is visible with an increase in capex activity across cement, chemicals, healthcare, and logistics.