The capex tracker index of institutional research firm Avendus Spark shows a reading of 342 in June 2023 - the highest in more than 12 years. The index has been consistently rising since December 2020 - when it hit a low of 147. The index assigns weights to private capex announcement (35%), aggregate new order (15%), import of capital goods (10%), and central government capex and state capex (20% each).
India's corporate capex spending is rising due to rising cash flows and improving balance sheets, with three out of four companies from a sample of 373 of the S&P BSE 500 index reporting year-on-year improvement in gross fixed assets for FY23. Mainly oil and gas, metals and power firms form a major part of incremental GFA.
"It (RBI) is not necessarily synchronising (with western central banks) but at the same time, also watching the global movement of capital. I think the RBI is looking at the Indian economy a lot more for our purpose," Sitharaman said in a post-budget interaction in Jaipur.
Apart from easing business and launching incentive schemes for several manufacturing sectors, the government in the Union Budget has stepped up its own capital expenditure by a record 33 per cent to Rs 10 lakh crore for FY24, hoping that it will cascade and kickstart a virtuous
The question is, how will the government achieve the path of fiscal consolidation, in the aftermath of a pandemic and especially when it's an election year just around the corner? Details here.
“Everywhere we have tried to be realistic. And that is why when people ask me, have you reduced your Budget on some things? No, we have been realistic. Absorption is also a very important indicator of where your money will be well received. There is no point in giving money in every head because it exists.”
The amount would be 3.3 per cent of GDP and about three times the outlay made in 2019-20.
A slow pick-up in private capex during the next financial year is likely on the back of the government’s production-linked incentive schemes, which if successful, can provide a much-needed boost to manufacturing, he says.
Bulk of the CAPEX that companies have to put will be concentrated between FY24 to FY26 as most of the major sectors start manufacturing activities from FY24 onwards.
Driving innovation and transformation are imperative for profitable growth. Even though the pressure on CFOs is to reach their financial goals, most companies are more purchase-price oriented. Is it an old concept or are companies still taking a Total Cost of Ownership (TCO) perspective and Total Economic Impact (TEI), especially when considering moving offshore, manageability cost and tech upgrade cost? This discussion explores how the TCO perspective is crucial in achieving a value-adding relationship with suppliers. How is TCO really about creating a holistic view of IT operational costs? The discussion will also shed light on TCO from capital expenditure versus operational expenses in the context of the changing world. What are the innovative and flexible payment structures CFOs looking at?
"We are on course to achieve our fiscal deficit target and it is not because of a slowdown in capital expenditure," said Somanathan, who is also the expenditure secretary.
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