Private sector investments will pick up soon, say experts

Driven by huge contraction in the first two quarters, investments were projected to decline by over 12 per cent in the current fiscal by the second advance estimates, against a 5.44 per cent growth the previous year.

The Centre’s capex grew by 35 per cent to Rs 3.62 trillion in the first 10 months of the current fiscal, against Rs 2.68 trillion the previous year. However, state governments’ capex remained compressed, he added.

Acording to experts core sector data substantiates the point that investments in the private sector remained subdued. Even construction-related investments were not picking up, as seen by the fact that cement production declined for the third consecutive month in January by six per cent, he said. Despite festive and pent-up demand, private final consumption expenditure declined, albeit at a much slower pace of 2.4 per cent in Q3, compare with more than 11 per cent contraction in Q2, and over 26 per cent fall in Q1.

Analysts believe that private sector investments will slowly pickup from the second half of the next financial year.

Demand will gradually grow in the next fiscal, as the economy is poised for double-digit growth.