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Government outspending private sector on capex!

Posted by fairval on January 6, 2014

The chart below is rather shocking. After 20 years of so-called liberalisation, it is the government which is spending more on capex. The UPA government, under MMS, has made India come full circle. Wish the chart below had data going back 15 years or so, it would be great to see when did this happen last.

Private sector capex has almost ground to a halt, and is at lowest levels since 2005. Quarterly capex from private sector, as measured by new project starts, appears down to around $4-5bn, which is negligible.



2 Responses to “Government outspending private sector on capex!”

  1. Varadha R said

    Since the Government is a far poorer capital allocator than the private sector, it is then no wonder that capital efficiency of India has dropped. Sort of like choosing to drive a car with a far inferior fuel efficiency to traverse the same distance.

  2. fairval said

    Yes, this is precisely what should not be happening. Let alone capex, even in infra like roads, power – private sector has no willingness or capacity to invest right now

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