RBI is cautious as long-term inflation expectations of market participants remain elevated with 5Y and 10Y ahead average inflation tracking 4.9% and 4.5% respectively

Download Report
Nov 13, 2023

QuantEco Research || States taking the lead on capex

 The 12-month trailing cumulative capex of all states registered a growth of 28.3% YoY in Sep-23, overtaking central government’s 12-month trailing capex growth of 25.3% YoY in Sep-23


Over the last 12-months, the correlation between states and central capex has been negative (at -0.67), with states improving upon capex even as momentum in central capex has eased from record high levels. States now have a share of 43.9% in government capex (on 12m trailing basis), up from its recent low of 41.7% in Oct-22. Tax buoyancy and dedicated transfers from the centre have helped states to scale up capex. Upcoming elections in few states may have also been an incentive for ramping up capex. There are 16 states/UTs (including poll bound ones) that have outperformed centre’s capex disbursal rate of 43.1% YoY in H1 FY24. The overall strength in combined capex done by central and state governments has been of support to the infrastructure sector and bodes well for improving India’s growth potential.