Opinion Mapping capex by private sector: Well begun

The Ministry of Statistics and Programme Implementation (MoSPI) has released the first ever “Forward-Looking Survey on Private Sector CAPEX Investment Intentions”. Capex essentially refers to capital expenditure, which means money spent towards the creation of long-term productive assets in the economy. As the survey underscores, “capex is fundamental to expanding production capacity, thereby serving as a catalyst for accelerated economic growth. This growth, in turn, supports job creation and enhances labour productivity.” For a developing economy such as India, high growth rate in capex is central to achieving the ambition of becoming a prosperous nation and transitioning to becoming a developed country. The survey was conducted between November 2024 and January 2025. The primary objective of this survey is to estimate the capex trends of private corporate sector enterprises for five years: From the past three financial years (2021-22, 2022-23 and 2023-24, in the current instance) along with anticipated capital expenditure for the current year (2024-25, in this instance) and the upcoming financial year (2025-26).

Out of a total of 3,064 responding enterprises, only 2,172 reported their capex data (actual and intentions) for the full five-year period. Even though the survey was conducted under the Collection of Statistics Act, 2008, MoSPI noted that many companies had reservations about sharing data, thanks to concerns relating to legitimacy and cyber-risks. As a result, even MoSPI advises caution when reading the data. “As this is the first round of the survey, the findings may be seen as indicative and subject to refinement in future iterations,” it says. On the whole, the data shows sharp fluctuations in private capex from one year to another — varying from Rs 3.9 trillion in FY22 to Rs 5.7 trillion in FY23, then falling to Rs 4.2 trillion in FY24 before rising to Rs 6.6 trillion in FY25 and then falling to as low as Rs 4.9 trillion in FY26. The year on year variations are so substantial that one can draw very different conclusions based on the year chosen for analysis. For instance, between FY22 and FY25, the capex grew by 66 per cent but if you add the current year (FY26), the overall growth fell to 23 per cent.

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Even so, the survey underscores the existing notion that private sector capex has not grown fast enough. The Union government’s capex, for instance, grew by 230 per cent in the five years between FY21 and FY25. The government under Prime Minister Narendra Modi has been trying to incentivise private sector capex because it believes that only when the private sector starts investing can India make the economic transition. To that end, it is a welcome move that the government has now started formally mapping capex by the private sector. In the coming years, it will further help policymakers and corporations in making better choices.