Anjali Sharma
GG News Bureau
NEW YORK, 10th July. A report showed on Monday that Indian economy is among the few in the region where investment rates rose between 2015 and 2023.
According to a research note by DBS Bank the broad narrative around the pick-up in the investment up cycle is that it is driven mostly by the public sector, led by the Central government.
According to Radhika Rao, Executive Director and Senior Economist, and Daisy Sharma, Data Analytics, DBS Bank, the private sector has led the pickup in capital formation post-pandemic, driven by households.
The report said “Overall gross capital formation (GCF) rose to 33 per cent of nominal GDP in FY24, better than in recent years but still lower than a decade ago,”.
The composition of investments showed that the share of the public sector in GCF was at 22 per cent in FY23, with the rest accounted for by the private sector – corporates and households – making up the bulk of the overall GCF.
The private sector households led the pack with a 40 per cent share in FY23, followed by non-financial corporates at 37 per cent.
The note read “Household investments rose to the highest in a decade in FY23 and, alongside corporates, totalling 25 per cent of GDP. Public sector financial as well as non-financial entities and general government comprise the rest 7 per cent of GDP,”.
According to the note, dwellings and buildings have been at the forefront, also reflecting higher public sector participation.
“An upturn in machinery and equipment is a work in progress. We see similar stirrings in the sectoral breakdown as well. Lastly, we construct a multivariate regression model to gauge the drivers and outlook of gross fixed investments,” said Rao.
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