By Ankit Gohel Jun 22, 2021 4:45:34 PM IST (Updated)
Given the macro construct, the main driver remains consumption demand revival, which is the underlying bedrock for the investment demand cycle to recover. This means the demand proxies for higher capacity utilisation as well as likely capex, viz. industrial consumables such as bearings, abrasives and forgings, should also see tailwinds.
The investment cycle in India after a decade is definitely shaping up for the better. The hope pins around capital expenditure (capex) over the ensuing three years in core sectors ̶ cement, metals, oil refining and power (especially renewables) which is pegged at about Rs 5 lakh crore.
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This should not only be the highest in a decade but is also likely to be more than 2x the capex over the previous three years. Moreover, the government’s production linked incentives (PLI)–led capex should be Rs 1.4 lakh crore in other sectors such as consumer durables, pharmaceuticals and automobiles.
Household capex, especially in residential property, and government infrastructure spend should also see the best growth phase in a decade. It appears more decisively that the governments globally are betting on fiscal stimulants, especially in infrastructure, to recover from the COVID-19-led economic challenges, which means reflation is a key likely impact.