India Inc.’s Spending Splurge May Not Trickle Down

The carnival of capital expenditure that was awaiting Narendra Modi’s return to power in India seems to have been delayed. That’s partly because the prime minister’s narrow election win doesn’t augur well for economic reforms. Also, interest rates are high, fiscal policy tight and local firms are worried about price competition from Chinese rivals facing weak sales at home.

Large Indian companies, however, are still drawing up ambitious plans, even though they will need debt — lots of it — to decisively move away from a decade-long investment drought that only ended with a post-pandemic boom. That surge is now exhausted. And tiny enterprises, which create nonfarm jobs at the vast bottom of the pyramid, look stretched. Can a handful of titans lift all boats?