Capex spending of formal manufacturing firms surpassed pre-Covid level in FY23, employment growth at 11-year high

Capex spends surpassed pre-Covid level in FY23

Employment in the formal manufacturing sector rose at the fastest pace in 11 years in 2022-23, as capital spending by firms rebounded beyond pre-Covid levels, according to a Moneycontrol analysis of Annual Survey of Industries data released on September 30.

Employment growth picked up to 7.4 percent in FY23 compared with 7 percent in FY22, marking the second consecutive year of over 7 percent expansion.

Meanwhile, companies also invested more in the capital, with the capex of the formal sector rising 77 percent to Rs 5.85 lakh crore in FY23 from Rs 3.3 lakh crore in FY22. Capex spending had declined to around Rs 3 lakh crore from Rs 4.16 lakh crore in FY20.

Profits of formal sector firms also rose during this period to Rs 9.76 lakh crore.

Emoluments to workers were also up at 14.2 percent compared with 15.9 percent growth witnessed in FY22.

“The results show that the Gross Value Added (GVA) grew by 7.3% in current prices in the year FY23 over FY22. Increase in input was 24.4% while output grew by 21.5% in the sector in FY23 over FY22,” the ministry stated.

Formal manufacturing is still concentrated in specific states.

Data shows that the top five states accounted for 54 percent of the total manufacturing value added of the country and 55 percent.

“Maharashtra ranked first in 2022-23 followed by Gujarat, Tamil Nadu, Karnataka and Uttar Pradesh” in terms of gross value added. The top five states employing highest number of persons in this sector were Tamil Nadu, Maharashtra, Gujarat, Uttar Pradesh and Karnataka.