New Delhi, Aug. 28 -- India's industrial capital expenditure (capex) cycle is in the spotlight as policymakers and analysts search for answers to its persistent weakness. Many explanations have been offered over the years, but evidence points to a demand problem at the heart of this capex conundrum.

Without tackling core demand problems by empowering wage earners, easing household balance-sheet stress and revitalizing exports, sustained growth in industrial capex will remain out of reach. To achieve this, addressing the fundamentals of India's economy is now imperative.

India's investment trends have been on a roller-coaster ride over the past decade. More than half a decade ago, investment as a share of gross domestic product (GDP) had...