Government's Close Watch on Capex as Private Investment Lags

NEW DELHI: The government is maintaining a vigilant eye on capital expenditures (capex) as private investment continues to show signs of weakness. This cautious stance is partly attributed to the global uncertainties sparked by the US President Donald Trump's tariff policies.

April-May Capex Overview: The central government's capital expenditure has seen an uptick, with ministries and departments utilizing 20% of their annual allocations, a significant rise from 13% in the same period last fiscal year.

Private Sector's Hesitation and Selective Investments

While the private sector remains largely on the sidelines, certain industries like cement and steel are bucking the trend, spurred by public investments in infrastructure projects such as roads and railways. The electronics sector is also experiencing a surge, thanks to initiatives like the Production Linked Incentive (PLI) scheme.

Challenges and Future Directions

Despite these pockets of growth, overall capacity utilization hasn't reached levels that would encourage companies to invest in new production lines. The shift towards greener technologies in sectors like automobiles and energy is further complicating investment decisions.

Government sources acknowledge the current sluggishness in private investment and are exploring measures to stimulate activity. There's also a focus on identifying new areas for public investment, including urban infrastructure, to ensure the economy's growth trajectory remains on course.