TIWN
New Delhi, June 22 (TIWN) The stars are beginning to align with multiple drivers for an investment cycle to start taking shape in India, after a decade.
According to a note by Spark Capital, capital expenditure (capex) over the ensuing three years in core sectors, cement, metals, oil refining and power (esp. renewables) should be about Rs 5 trillion. This should not only be the highest in a decade but is also likely to be more than 2X the capex over the previous three years. Moreover, the government's production linked incentives (PLI) -- led capex should be Rs. 1.4tn in other sectors such as consumer durables, pharmaceuticals and automobiles. Household capex, in residential property, and Govt. infrastructure spend should also see the best growth phase in a decade. It appears more decisively that Governments globally are betting on fiscal stimulants, especially in infrastructure, to recover from the COVID-19-led economic challenges, which means reflation is a key likely impact, the report said. A discussion on investment cycle invariably leads to 2003-2011 purple patch nostalgic comparison. "We think the ensuing investment cycle, as it appears now, is still a far cry from what we saw then, when capacities expanded fivefold in multiple sectors including thermal power, which appears unlikely now," it added.
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