Private Capex to touch Rs 6.11 lakh cr this year

Fitch Ratings

Rama Krishna Sangem

Hold your breath, private sector’s capital expenditure, Capex, can touch Rs 6.11 lakh crore in the coming financial year, ending March 31, 2024. This is in addition to the Capex – Rs 13 lakh crore – proposed by Union Finance Minister Nirmala Sitharman in her budget on February 1 this year. Of the Rs 13 lakh crore, Rs 11 lakh crore will directly come from the budgetary support while Rs 2 lakh crore to come from other departments like railways.

So, we can expect this year around Rs 20 lakh crore of Capex, a record in our country’s history. This is according to a report from Fitch Ratings, an international GDP tracker, put out on March 28, Tuesday. The report says, the private Capex will grow by 10-12 per cent this year, ending March 31, 2024.  This kind of growth is possible due to governmental spending on infrastructure on its own and through PLI (Productivity Linked Incentives) schemes.

Fitch took the Capex spending proposals from 19 major listed companies on the stock exchanges. Mukhesh Ambani led  Reliance Industries Limited tops the chart with around Rs 2.15 lakh crore followed by Sunit Bharti Mittal led Bharti Airtel with close to Rs 80,000 crore. Not surprisingly, Adani led companies which used to figure at top, are somewhere down the list – all of this group contribute to about Rs 57,000 crore of Capex this year.


Infrastructure spending high

Naturally, Capex is spent on infrastructure sectors. Fitch report too says, 2.34 lakh crore will go to basic facilities of conglomerates, followed by Rs 1.33 lakh crore on metals, Rs 96,900 crore on telecom facilities. Automobiles take Rs 76,000 crore and ports Rs 14,300 crore.  Power sector takes Rs 25,000 crore. Though it is not mentioned, government’s Capex too will be spent on these lines.

However, this much of high amount of Capex has its benefits and drawbacks to the economy. Benefits are that this will create employment opportunities and provide long term assets and infrastructure. At the same time, there could be high commodity prices and increase in interest burden on the companies. As there is slowdown in global demand, the firms may see slump in revenues over investments.

Narendra Modi led BJP government at the Centre pinned hopes on higher Capex in the election year. As general election will be held April/May 2024, this level of Capex, both from government and private sector is expected to generate jobs and pump in money into markets. But, what if things pan out otherwise – for example, big companies collapsing under the weight of interest burden and delay in completion of projects? We will know answer to this later.



Rama Krishna Sangem

Ramakrishna chief editor of excel India online magazine and website

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