India's Growth Hinges on Private Investment Revival, Says SBI Report

A State Bank of India report suggests India's future growth depends significantly on reviving private investments. Despite a drop in gross capital formation in FY24, both public sector and government investment showed growth. The report forecasts an optimistic GDP growth of 6.5% for FY25.

According to a recent report from the State Bank of India (SBI), the country's economic growth will heavily rely on reviving private investment. The document underscores the decline in gross capital formation (GCF) for FY24 as a critical issue and stresses the necessity for an upturn in private corporate investment to boost India's future economic trajectory.

SBI emphasizes that reversing the slowdown in private sector investment is vital. GCF, which gauges overall investment in the economy, dropped from 32.6% of GDP in FY23 to 31.4% in FY24. This decline marks a notable downturn from a 10-year high of 25.8% reached by private sector investment as a share of GDP in FY23 to just 24.0% in FY24.

However, the report offers a silver lining in the form of increased public sector investment, which hit an all-time high of 8.0% of GDP in FY24, the highest since FY12. Both public and government investments have grown compared to FY23, supporting overall investment levels. The report anticipates improvements in both savings and investment, forecasting GDP growth of 6.5% for FY25, and highlights the importance of private investment revival to ensure sustainable economic growth.

(With inputs from agencies.)