Analysts and government officials said that this points to a strong rebound in private investment, after two years of the Covid-19 pandemic, on top of the ongoing public sector capex.
On a nominal basis, gross fixed capital formation (GFCF), a proxy for infrastructure investment, contributed 29.2 per cent to FY23 GDP, against 28.9 per cent in FY22 and 27.3 per cent in FY21. On real GDP terms, GFCF was 34 per cent as a share of GDP in FY23, compared to 32.7 per cent and 31.1 per cent in the previous two years.
Nominal GFCF contribution to GDP in Q4FY23 was 31.7 per cent, against 26.7 per cent in Q3FY23 and 31.4 per cent in Q4FY22. In real terms, it was 35.3 per cent, 31.7 per cent, and 34.3 per cent, respectively.
“On the demand side, fixed investment grew 8.9 per cent year-on-year in FY23 and 8 per cent in Q4, supported by strong government capex and also some scaling up by the private sector,” said Rahul Bajoria, MD & head of emerging markets Asia (ex-China) Economics, Barclays.
“Healthy growth in GFCF reflects the sustained focus of the government on capex,” said Sunil Sinha, principal economist with India Ratings.
“Our preliminary estimates show that private investment increased 21.4 per cent year-on-year in FY23,” Nageswaran said.
“We have been flagging the issue of weak private final consumption expenditure (PFCE) as the current recovery in consumption demand is showing a K-shaped recovery. The current consumption demand is highly skewed in favour of goods and services consumed largely by households falling in the upper-income bracket. A broad-based consumption recovery, therefore, is still some distance away,” said Sinha of India Ratings.