India needs reliable data to track capital expenditure across the economy

Quarter-after-quarter, data from the Centre for Monitoring Indian Economy (CMIE) showed that investment projects remained stalled. The promised revival of ‘animal spirits’ did not materialize.

In 2016, senior government officials asked CMIE to reclassify some projects it identified as ‘stalled,’ according to two people with direct knowledge of the matter. CMIE’s capex data did not reflect the new government’s efforts to restart some of these projects, the officials argued.

Veteran journalist Sunil Jain wrote about the pressures being put on CMIE, and the pressures eased after that. But the official unease with the privately-managed capital expenditure-tracking database persisted.

Also read: Centre likely to miss ₹1.5 trillion capex loan target for states in FY25

A new capex survey being planned by the ministry of statistics and programme implementation (Mospi) may partly assuage such concerns. But beyond the desire to shape economic narratives, there is a genuine need for policymakers and analysts to understand India’s investment cycle better.

Almost every year, economic policymakers and analysts manage to sight “green shoots" of a private capex recovery. So far, they have been wrong. Like a broken clock that gets it right twice a day, they will get lucky one day in the future. But without better data, they will routinely misjudge the capex cycle.

India is one of the few large economies that does not have an official survey on capex intentions or allocations. Most large economies run such surveys on a regular basis.

For instance, the Annual Capital Expenditures Survey (ACES) conducted by the US Census Bureau provided data on the capex of American companies for decades, before being merged with the Annual Integrated Economic Survey in 2024. ACES data, collected from a representative sample of American firms, was used to compute annual estimates of investments in the national accounts.

In the UK, the Quarterly Acquisitions and Disposals of Capital Assets Survey provides data on the value of assets purchased and sold by companies. Assets include both physical assets, like buildings and vehicles, as well as intangibles such as computer software or databases. As in the US, the data feeds into the national accounts and is used by analysts to track investment allocations across industries.

The quarterly capex survey of the Australian Bureau of Statistics provides both actual capex expenses and short-term and long-term capex intentions across industries and regions. The data is used by policymakers and analysts to study nationwide and state-wise capex trends.

In all these economies, the official capex surveys are based on a comprehensive business register that records all relevant firm details. These include a common unique identifier (that is used across departments and data-sets), establishment level details (for firms or enterprises with multiple establishments), location (state, district or geo-markers), sector and employment size.

As a result, it is possible to analyse capex trends across multiple levels of disaggregation. It is also possible to compare the capex survey data with other economic databases that are based on the same business register.

You don’t have to make 1,200 assumptions to make such comparisons. Since the business register is dynamically updated, you don’t have to worry about zombie firms either.

Also read: MoSPI's first-ever private capex survey to track investments in 10-15 key sectors

Over the past two decades, Mospi has made several attempts to build a comprehensive business register. It has not succeeded so far. Every so often, a state or two manages to build a decent business register, but it becomes outdated very quickly.

The different corporate databases in the country—the Economic Census, Annual Survey of Industries, MCA-21 and the goods and services tax network (GSTN)—do not talk to each other. This poses a problem not just for the upcoming capex survey, but also for national and regional income estimation.

Given that Mospi’s new capex survey is based on the MCA-21 database, it may not be able to provide state-level details, since that database captures very little state-level information. Since MCA-21’s industrial classification system is prone to errors, it is likely that such errors would creep into the new capex survey as well.

Nonetheless, the new survey would still count as a step in the right direction and help fill an important data gap. While CMIE’s quarterly capex-tracker provides a fair idea about investment intentions of large companies, it was never meant to be a substitute for a nationally representative survey.

Despite the limitations of MCA-21 as a sampling frame, the new capex survey could still provide important insights on India’s evolving capex cycle.

For the capex survey to become more useful in the future, it needs to be based on a coherent and comprehensive business register. The utility of the capex survey will increase manifold once it starts providing state- and district-wise break-up of investments.

India’s first official committee on regional accounts, led by national accounting pioneer Moni Mukherjee, had recommended state-level capex surveys as far back as 1976. Hopefully, we will get to see such surveys in the 21st century.

Also read: Capex mood picks up in Q2, but revival isn't broad-based