India’s Capex Cycle Sets the Stage for a $10 Trillion Economy
India has moved from a $300 billion economy to $3 trillion in 30 years. The vision is to become a $10 trillion economy by 2031. This transformative journey is backed by multiple growth vectors like broader demand from consumption with adequate support from the lower cost of capital and a proactive policy stance from the government.
Most of this will require a sizeably higher dose of capital investments from every constituent in the economy. Gross fixed capital formation (GFCF) forms around 30% of India’s GDP at $790 billion. Public and private capex are stronger, while infrastructure and industrial capex were flat over the last decade. India has witnessed a sluggish investment cycle for the past 10 years since peaking in FY11, following the recovery from the Global Financial Crisis (GFC).
Photo courtesy of Micheile Henderson.