Private firms may resume capital spend after a year
Private companies have adopted a ‘wait-and-see’ approach
New Delhi: Capital spending in India is likely to take 12 more months to start recovering as private companies have adopted a ‘wait-and-see’ approach, says a report by global ratings agency Standard and Poor’s. “We expect capital spending in India will continue to fall in fiscal 2016 despite its economy being one of the few bright spots in Asia-Pacific,” it said.
According to the report, corporates in capital-intensive sectors are mostly focusing on improving profitability and lowering leverage rather than looking at new projects. “We believe capital spending will take 12 more months to start recovering,” said the report titled India’s Private Sector Companies Adopt Wait-And-See Approach To Capital Spending.
It said research indicates that capital expenditure peaked in fiscal 2014 at Rs 3.7 lakh crore for the top 100 Indian companies and it would decline over the next two years. India’s fiscal year runs from April to March.
It, however, added that “we expect state-owned firms and Reliance Industries to lead capital spending before a broader-based pick-up occurs.” “We believe capital spending by top corporates will further decline by 15 per cent in FY2016,” it said.