Private Investment Plunge: A Decade Low in FY24

ICRA reports that private capital expenditure's share in India's overall investments hit a 10-year low of 33% in FY24. Unlisted companies held back, while listed ones increased capex. Factors like weak domestic consumption and Chinese imports limited expansion. Improvements in corporate cash flow and rate cuts could revive private investment.

Domestic investment trends reached a concerning milestone as private capital expenditure in India plunged to a decadal low, representing just 33% of overall investments in FY24, ICRA reported on Monday.

Notably, the dip was prominent among unlisted firms, whereas listed companies managed to ramp up their capital expenditures. This situation raises alarms about the private sector's fading influence in the economy amidst weak urban consumption, sluggish export demand, and cheap Chinese imports.

To reinvigorate the private capex cycle, the agency highlights the improvement in corporate cash flows and gearing, paving the way for potential increase in private investments, along with benefit from anticipated rate cuts and tax relief measures by the government.

(With inputs from agencies.)