Will private capex pick up add to Modi government’s big investment spend? Watch video

India, which is amongst the fastest growing major economies in the world, has seen its private capital expenditure moving up. In fact, experts believe that private capex is expected to be a key driver of GDP growth for an economy that is managing to hold steady amidst global economic headwinds and recessionary pressures.
But, is the recovery in private capex sustainable and is it enough to take the heavy investment load off the government? In this week’s episode of TOI Business Bytes, Ranen Banerjee, Partner, Government Sector Leader at PwC India explains the significance of private sector investment and its role in job creation and GDP growth.
Watch the video below to know how broad-based Ranen Banerjee believes private capex pick up is, which sectors are seeing the maximum investment announcements, and the key challenges and risks the private capex revival faces.

“Traditionally government capex has been higher in the share of capex, because of the size of government, and the government pump priming. Government budget spending on capex is very high. But the capex that comes from the private sector is actually more job generating,” Ramen Banerjee tells TOI.
According to Banerjee the key reasons for private capex not picking up steam were; low capacity utilizations and global geopolitical and economic headwinds that caused uncertainty and nervousness on the demand front.
He believes that while the government has little control over external factors, more measures on the ease of doing business front may send the right signals to the private sector for sustained investment revival.
“The private sector is executing a lot of projects for the government. Paying suppliers and SMEs on time will lead to lesser working capital requirements for the businesses. And if the working capital requirements are lesser, then the borrowing cost will be lesser,” he explains.