Govt capex seen rising in India, Deutsche Bank
MUMBAI: Capital expenditure by state governments in India has picked up pace, Deutsche Bank said in a report.
Deutsche bank's has analysed the investment momentum in key states by studying the CMIE capex data (value and units of projects completed) which is released on a quarterly basis.
Key observations:
At the state government level, capex spending has increased substantially since FY16 for most states, compared to their past trend, and encouragingly the positive momentum is continuing for many states through FY17 as well.
Overall, project completion rate of all states is up 104%yoy in April-Dec'16, over April-Dec'15, with five states - Maharashtra, Uttar Pradesh, Telangana, West Bengal and Punjab constituting almost 83% of total value of projects completed during the first nine months of FY17.
Interestingly, growth momentum is stronger at the state government level (+104%yoy) than at the central government level (-13%yoy) in FY17 which indicates that there is greater traction in state government capex.
While the project completion growth rate in many states is down in FY17 ytd due to a high base of the previous year, Deutsche notes that the average growth rate of FY16-FY17 will be substantially higher than the average of FY10-14 for most states.
It is encouraging to see that capex momentum has picked up in states such as Uttar Pradesh, West Bengal and Bihar in the last two years, albeit from a low base, especially given that these states are generally regarded as economically backward relative to the other states, Deutsche report said.
Deutsche bank's has analysed the investment momentum in key states by studying the CMIE capex data (value and units of projects completed) which is released on a quarterly basis.
Key observations:
At the state government level, capex spending has increased substantially since FY16 for most states, compared to their past trend, and encouragingly the positive momentum is continuing for many states through FY17 as well.
Overall, project completion rate of all states is up 104%yoy in April-Dec'16, over April-Dec'15, with five states - Maharashtra, Uttar Pradesh, Telangana, West Bengal and Punjab constituting almost 83% of total value of projects completed during the first nine months of FY17.
Interestingly, growth momentum is stronger at the state government level (+104%yoy) than at the central government level (-13%yoy) in FY17 which indicates that there is greater traction in state government capex.
While the project completion growth rate in many states is down in FY17 ytd due to a high base of the previous year, Deutsche notes that the average growth rate of FY16-FY17 will be substantially higher than the average of FY10-14 for most states.
It is encouraging to see that capex momentum has picked up in states such as Uttar Pradesh, West Bengal and Bihar in the last two years, albeit from a low base, especially given that these states are generally regarded as economically backward relative to the other states, Deutsche report said.
