InvestorQ : Can we expect a revival in capital investments post COVID-19 scenario?
Arusha Ray made post

Can we expect a revival in capital investments post COVID-19 scenario?

Answer
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3 months ago


If you betting on a capital investment cycle revival the news is not too encouraging. As per a report by India Ratings, private sector capex could compress by up to 26% in FY21 due to the lag effect of COVID-19 and may not recover before 2025. It also expects conservatism in business decisions with focus shifting to cost optimization rather than capital outlays.

The key issue could be the capacity utilization. It may be recollected that the capacity utilization was just about 70% prior to the pandemic. Post pandemic this would have reduced further. It may take another five years for the businesses to be able to reach 100% capacity utilization. India Ratings expects capital investments to be delayed till then.