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The Economic Survey on Tuesday said that private investment has started taking root and is lending strength to the recovery process, triggered a strong public spending initiative and resurgence in private consumption. It pointed to capacity utilisation of 74. 3% during the June quarter, which had reached the tipping point of 75. 3% during the previous three-month period. Besides, it said that new investment announced in the manufacturing sector during April-December 2022-23 was five times the corresponding level in FY20.
The statement is seen tobe significant since even as the economy recovered from multiple shocks, there was concern that it was largely driven by public investment, especially the focus on infrastructure upgrade. The investment process was so far seen to be driven largely by government capital expenditure. The survey suggested that the concern has been addressed, something that takes note of a vulnerability and will help reduce stress on the exchequer and give the government more elbow room to focus on building capacity in other sectors.
Going forward, the government expects that improved balance sheets of banks and companies will boost corporate sector investments. What is expected to aid the process further is the increase in the net sales of companies and improvement in profit margins.
“With global commodity prices declining, input costs are set to fall and profit margins are expected to increase. Expected increases in profits and strengthened balance sheets have made the corporate sector financially stronger and optimistic about increasing net sales,” the survey said. It added that the recovery process is “complete” in India with services too making astrong comeback.
While the Centre said that its strategy to boost capex has paid, it also complimented states for the steps taken by them over last few years.
The statement is seen tobe significant since even as the economy recovered from multiple shocks, there was concern that it was largely driven by public investment, especially the focus on infrastructure upgrade. The investment process was so far seen to be driven largely by government capital expenditure. The survey suggested that the concern has been addressed, something that takes note of a vulnerability and will help reduce stress on the exchequer and give the government more elbow room to focus on building capacity in other sectors.
Going forward, the government expects that improved balance sheets of banks and companies will boost corporate sector investments. What is expected to aid the process further is the increase in the net sales of companies and improvement in profit margins.
“With global commodity prices declining, input costs are set to fall and profit margins are expected to increase. Expected increases in profits and strengthened balance sheets have made the corporate sector financially stronger and optimistic about increasing net sales,” the survey said. It added that the recovery process is “complete” in India with services too making astrong comeback.
While the Centre said that its strategy to boost capex has paid, it also complimented states for the steps taken by them over last few years.
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