Robust Growth in Private Capex Signals Economic Resurgence

Private sector funding is seeing a significant surge, with bank approvals for projects growing at an annual rate of 20% since the pre-COVID era. This trend indicates a strong outlook for private investment, supported by improved economic and lending conditions. Government spending also aids in economic momentum.

Funding for private sector initiatives has witnessed remarkable growth, evidenced by a 20% compound annual growth rate (CAGR) in bank approvals since the pre-COVID era, as reported by Kotak Mutual Fund. The report reveals a surge in sanctioned project costs from Rs 1,168 billion in FY21 to Rs 5,657 billion in FY24, reflecting increased private sector confidence and business expansion.

The upward trend in bank approvals signifies robust private capital expenditure, bolstered by enhanced economic conditions and favorable lending environments. After a relatively stable period between FY14 and FY19, with capex figures ranging from Rs 2,000-2,300 billion annually, the private sector saw a significant boost post-COVID, marking a potent recovery.

Moreover, with cumulative central government capital expenditure rebounding sharply post-June 2024, driven by policy adjustments and post-election activity, the economy is poised for further growth. The government's capex is expected to accelerate towards the latter half of FY25, complementing the private sector's aggressive investment strategies and boosting India's overall economic trajectory.

(With inputs from agencies.)