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Revival Likely

Is investment activity finally picking up in the economy?

Revival Likely

Is investment activity finally picking up in the economy? At the macro level, gross fixed capital formation as per cent of gross domestic product, a proxy indicator for investments, is displaying some signs of revival. This measure of investment, which declined from 32.6 per cent in 2013/14 to 31.1 per cent in 2016/17, is estimated to have moved up to 32.9 per cent in 2018/19.

Narrowing down to the more micro level, capital expenditure by corporates is in line with the trend. Investments by the universe of BT 500 companies, the top 500 companies by market capitalisation, excluding BFSI and trading companies, grew 7.3 per cent between 2014 &18, 1.6 percentage points higher than during the previous government's (UPA-II) tenure. The rate of growth was significantly higher at 33.7 per cent under UPA-I.

Sectors such as power, textiles and hospitality have contributed significantly (average growth of over 15 per cent) to the capex growth during the current NDA government.

In UPA-I, almost 25 sectors had contributed over an average 15 per cent growth compared to over 11 sectors in UPA-II.

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