News India Live, Digital Desk: Economic Growth: According to a report by HDFC Securities, the growth of private capital expenditure (CAPEX) in India was strong from FY1 to FY25 in the last five years, with a compound annual growth rate (CAGR) of 19.8 percent. The report highlighted that the growth of private capital expenditure during this period was strong, but it was not reflected in the debt growth of the banking system. This was because almost the entire capital expenditure was financed through strong cash flow from operations, reducing the need for bank loan.
The report said: “Private capital expenditure has been strong from FY 2021 to 2025, which records CAGR of 19.8 per cent… Private capital expenditure growth did not reflect in the debt growth of the banking system as almost the entire capital expenditure was financed by strong cash flow from operations during this period, thus the need for bank loans was limited.”
The report also mentions a strong increase in the central government’s capital expenditure during the same period. The central capital expenditure increased from ₹ 4,263 billion in financial year 21 to ₹ 10,184 billion in FY 25, which reflects CAGR of 24.3 percent. In this growth, the ministries related to road transport, railways, defense and transfer of capital expenditure to the states were a major contribution.
However, the state government’s capital expenditure lagged behind. The state capital expenditure increased from ₹ 4,223 billion to FY1 to FY22 to FY 25E at 11.9 percent slow CAGR in FY 21. While it increased by 28 percent, 11 percent and 26 percent in the next three years, in FY 25E so far it fell 20 percent to ₹ 6,075 billion (till February 2025).
States like Uttar Pradesh, Maharashtra, Madhya Pradesh, Tamil Nadu, Gujarat and Odisha were the main contributors in capital expenditure growth.
The report further stated that the top 250 private companies (except BFSI) spent a total of ₹ 29.6 trillions on capital expenditure between financial year 20 and FY 24, which was only 57 percent of their total cash flow (₹ 52.7 trillion) from operations during the same period. This indicates that companies had sufficient internal resources and surplus cash to meet their investment plans without increasing their debt burden.
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