4 min readNew DelhiAug 8, 2026 11:57 AM IST
First published on: Aug 7, 2026 at 06:49 PM IST
Last week’s GDP column looked at the data for the Index of Industrial Production (IIP), which hit a 23-month high in June, and pointed out that there was a clear difference in the use case for the industrial goods being produced in India. The IIP maps changes in the volume of production in Indian industries. Most of the growth in industrial production was being used for making capital goods, infrastructure goods and intermediate goods (that is, unfinished goods that go into making other goods). At the same time, the IIP growth in use of consumer goods had remained weak for the better part of the past year, especially the past quarter. This suggested a lingering weakness of consumer demand in the Indian economy.
Investments look up…
The latest data from tracking corporate investments in the Indian economy, released by the Centre for Monitoring Indian Economy (CMIE), seems to confirm this trend. Between the start of the current financial year (April 1) and August 5, the Indian economy saw investment announcements of Rs 26.75 lakh crore. Economists at the Bank of Baroda (BoB), a leading public sector bank, consider this level of investment to be “impressive” given that these four months have coincided with a lot of global geopolitical uncertainty and some new US tariffs being imposed on India.
Another positive feature is that 86% of the announcements have come from domestic private sector companies, suggesting that “private investment has definitely picked up”, according to the BoB report.
…but too concentrated in a few sectors
However, if one looks at the sectors where most of the new investments are targeted, the picture becomes quite stark. The chart, sourced from a BoB research report, shows the industries that received the highest share in total investments. Sectors that received less than 1 per cent of the total investment have not been considered for the chart.
As much as 56% of all proposed investments are directed to the information technology-enabled services (ITES) sector. Further, almost 99% of this 56% share — around Rs 15 lakh crore — of capital expenditure is directed towards 13 companies in the Data Centre and Artificial Intelligence space within ITES.
IT-enabled services get a lion’s share of proposed investments. Source: Bank of Baroda research
The second biggest chunk of investments — 26% of the total or roughly Rs 7 lakh crore — is directed towards boosting conventional electricity. Again, the bulk of this investment — Rs 6.5 lakh crore — is set to go to four companies in the nuclear energy space.
As the chart shows, the bulk of the remaining 18% of the total proposed investments are also towards sectors like aluminium and aluminium products, steel and other electronics.
Consumer goods segment lags
“The overall announcements for consumer goods including automobiles was less than Rs 2000 crore with a share of 0.7%. This is indicative of the combination of surplus capacity as well as demand conditions,” states the BoB report.
In other words, investment intentions are still not broad-based. Owing to weak consumer demand, fresh investments are not forthcoming.
Implication and outlook
Continued weakness in consumer demand is never a good sign for future economic growth. Not only does it drag down growth by itself, but it also weakens the other major contributor to GDP growth: investments by companies.
Most estimates suggest that overall growth in the current financial year will fall behind the 7% trend of the past three years. However, it is still the start of the second quarter in the financial year and, from the perspective of consumer demand (especially in rural areas) in India, a lot would depend on the outcome of the monsoon.
As much as 56% of all proposed investments are directed to the information technology-enabled services (ITES) sector. Photo: Wikimedia Commons 
IT-enabled services get a lion’s share of proposed investments. Source: Bank of Baroda research
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