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Informist, Tuesday, Apr. 29, 2025

 

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--Govt releases findings of private sector capex survey
--Govt: FY25 pvt capex seen INR 6.56 tln vs INR 4.22 tln FY24, per survey
--Govt: FY26 intended pvt capex INR 4.89 tln vs INR 6.56 tln FY25, per survey
--Govt: Survey data indicates pvt cos cautious in giving FY26 capex plans
--Govt: Data on pvt cos' FY26 capex plans should be interpreted with caution

 

NEW DELHI - Private investment in 2025-26 (Apr-Mar) is seen 26% lower from FY25, according to the statistics ministry's maiden capital expenditure survey, released on Tuesday. According to the survey's findings, the intended capital expenditure of private sector companies is seen at INR 4.89 trillion in the current financial year, down from INR 6.56 trillion in FY25.

 

However, the statistics ministry warned that the number for FY26 should be "interpreted with caution" as fewer companies provided details on their investment plans for FY26 than for previous years, indicating a "cautious approach".

 

"Out of the total 3,064 surveyed enterprises, 2,172 enterprises reported CAPEX intentions for 2025–26. The data suggests a measured approach by respondents in declaring capital expenditure plans, with some enterprises indicating that final figures were not yet available or pending management approval at the time of the survey," the statistics ministry said.

 

As per the survey, which was conducted during Nov-Jan, private companies spent INR 4.22 trillion on capital expenditure in FY24, INR 5.72 trillion in FY23, and INR 3.95 trillion in FY22.

 

The survey shows that capital expenditure by the private sector is much less compared to government's investments. The government has set a capital expenditure target of INR 11.21 trillion for FY26, while the revised Budget target for FY25 was INR 10.18 trillion. In FY24, the government had spent INR 9.49 trillion on capital investments.

 

The government has repeatedly called on the private sector to take on the baton on capital expenditure. On Tuesday, the finance ministry said that investment activity has gained momentum and is expected to strengthen further. "For the private sector, this is the time to invest in product differentiation and quality as easy pickings recede into history," the ministry said in a report.

 

To be sure, the statistics ministry's capital expenditure survey is not entirely representative of the whole private sector. The survey only included manufacturing enterprises with an annual turnover of INR 4 billion or more, trade enterprises with a turnover of INR 3 billion or higher, and other enterprises with an annual turnover of INR 1 billion or more.

 

Manufacturing, information and communication, and transportation were the top three sectors with the highest share in projected capital expenditure for FY25. Manufacturing had the highest share in projected investments at 43.8%, followed by information and communication activities at 15.6%, and transportation and storage at 14.0%.

 

Nearly 40.3% of the companies planned capital expenditure on core assets during FY25. Additionally, 28.4% companies intended to invest in value addition to existing assets, while around 11.5% focussed on opportunistic assets, and 2.7% on debt strategies. "The strategy of investing in distressed assets and non-performing loans was adopted by less than one-half of a percent of enterprises. Meanwhile, about 16.9% allocated their CAPEX towards other diverse investment strategies," the ministry said.

 

Nearly 49.6% of private corporate sector companies undertook capital investments in FY25 primarily for income generation. An additional 30.1% directed their investments toward upgradation, while around 2.8% focused on diversification.

 

Geeta Singh Rathore, director general, National Sample Survey Office, said this initial round of the survey can be considered as an "experimental phase", which provided insights to refine the questionnaire, methodology, estimation processes, and overall implementation. "The lessons learned will guide improvements for future surveys, with necessary adjustments to various aspects of the survey process," Rathore said in the preface of the report.

 

The ministry said that going ahead, greater emphasis will be placed on proactive engagement with participating enterprises prior to the survey. Efforts will also be made to address concerns regarding the credibility of the online survey and confidentiality.

 

The ministry noted that certain enterprises, such as some Special Purpose Vehicles involved in activities like road construction, often make substantial capital investments but do not report any turnover. "Consequently, although they belong to the corporate sector, these entities fall outside the scope of the survey. Conversely, SPVs within the construction sector that are part of the survey frame may lack future investment intentions due to the completion of their projects," the ministry said.  End

 

Reported by Shubham Rana and Siddharth Upasani

Edited by Vandana Hingorani

 

 

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