An employee prepares to move a heavy bar of steel inside the ArcVac ForgeCast factory, in Hooghly district, in the eastern state of West Bengal, India.
Credit: Reuters File Photo
New Delhi: Private investments, which are crucially important for economic growth and employment generation, are likely to gain momentum in the coming quarters after remaining muted in recent years, a survey conducted by the Confederation of Indian Industry (CII) showed.
Around 75% of the businesses surveyed believe that the current economic environment is conducive for private investments. Out of these 42% have termed it “very favourable” while 33% call it “somewhat favourable”.
However, 19% of the businesses are neutral on the current economic environment while 6% have termed it unfavourable. The survey was conducted among 300 large, medium and small businesses spread across the country over the past 30 days.
“Given that 70% of the firms surveyed said that they would invest in FY26, an uptick in private investments might be on the cards over the next few quarters,” said Chandrajit Banerjee, Director General, CII.
Muted investment was one of the key reasons for the decline in economic growth in the first half of the current financial year. India’s gross domestic product (GDP) growth slumped to a seven-quarter low of 5.4% in July-September 2024 period. As per official estimates, GDP growth is likely to come in at 6.4% for the year.
Government capex remained muted in the first half of the financial year due to the Lok Sabha election-related curbs.
While muted urban consumption has been one of the factors driving low private sector investment, global uncertainties about future trade, investment outlook, and changing technology and its impact too had dampened investors’ sentiments, Deloitte said in its India Economic Outlook report recently.
“With the two critical drivers of growth – private investments and employment – looking positive, we feel confident that the overall growth is likely to remain around a stable 6.4-6.7% this year and is likely to be 7% in FY26,” Banerjee said.
As per the CII survey, 97% of the firms are likely to increase employment in both FY25 and FY26. Around half of the surveyed firms are expected to increase their workforce by 10-20% in the current financial year. In FY26, 42% of the surveyed firms are expected to increase their workforce by 10-20% while 31% are expected to increase it by less than 10%.
On wages growth, which has an impact on personal consumption, nearly half of the surveyed firms indicated an average 10-20% increase in salaries of regular workers, including those at senior management and supervisory level.