Investment cycle showing signs of pick-up: Moody's

NEW DELHI: International rating agency Moody's Investors Service has said investment levels in India are showing nascent signs of recovery, driven by an upturn in the capital replacement cycle, and increased public sector expenditure.

"Recent high-frequency data show that India's investment cycle is starting to pick up," says Rahul Ghosh, Moody's Vice President and Senior Research Analyst.

"However, a revival in private-sector capital expenditure will be required to sustain the recovery in investment activity, because India's weak fiscal position will limit the ability of the government to further expand public sector-led investment," he said, in a statement on Tuesday.

Ghosh also said a broad-based and sustainable revival in the private sector capital expenditure cycle will likely take longer to materialize, given the high debt levels in the non-financial corporate sector, asset quality concerns in the banking sector, and subdued external demand.

Moody's analysis is contained in its latest edition of Inside India, a quarterly publication that looks at major credit trends in India.