Markets
Chart Beat: Government and households lead India’s investments
Summary
Household investments including residential real estate rose considerably year-on-year.India’s total investments as a percentage of gross domestic product (GDP) stood at 33.2% in the nine-month ended December (9MFY24), according to an analysis by Motilal Oswal Financial Services. This rate is the highest seen during the last nine years.
The performance was mainly led by growth in investments by the government – both Centre and states. For perspective, the government investments stood at 4.8% of the GDP in 9MFY24 versus an average of 3.6% in the 2010s.
Secondly, household investments including residential real estate rose considerably year-on-year. As a percentage of GDP, the investments in this sector were close to the decade high of about 12.5% in 9MFY24.
The sector which lagged was the corporate as the investments here grew at a slower pace. Motilal Oswal analysis shows that in 9MFY24 corporate investments grew at 2.6% year-on-year versus about 25% growth in the last two years. While investments as a percentage of GDP have picked up from the lows seen in FY21, they remain below the levels seen pre-covid.
All in all, a boost in infrastructure activity augurs well for the economy and as such the government’s thrust here is encouraging.
