Despite a despondent global trade outlook, India’s private sector is likely to increase its capital investment by 21.5 per cent to ₹2.67 lakh crore in 2025-26, according to an article published in the Reserve Bank of India's (RBI's) August bulletin.
The write-up, ‘Private Corporate Investment: Growth in 2024-25 and Outlook for 2025-26', credits robust macroeconomic fundamentals and a 100-bps policy rate cut by the central bank for the high capex numbers.
It also acknowledges continued policy push for infrastructure, sustained disinflation, combined with lower interest rates, easy liquidity conditions, and rising capacity utilization for helping foster an environment that is conducive to private investment.
Authored by Snigdha Yogindran, Sukti Khandekar, Rajesh B Kavediya and Aloke Ghosh, all from the RBI's Department of Statistics and Information Management, the article draws on multiple sources like bank/FI sanctions, external commercial borrowings, and equity issuances, to present a holistic view of investment intentions.
With Indian firms entering the 2025-26 fiscal year with healthier balance sheets, higher cash buffer, improved profitability, and greater access to diversified funding sources, it says the infrastructure sector is poised to attract a major share of the envisaged capital investment, led by the power industry.
Also Read: Ex-RBI Governor Urjit Patel appointed as IMF Executive Director
Referring to data related to the phasing of capital expenditure (capex) plans announced by private corporates, the article assesses their investment intentions and provides insights into the near-term outlook.
"The phasing profile of the pipeline projects based on all channels of financing taken together, suggests that the envisaged capex is estimated at ₹2,67,432 crore in 2025-26 as against ₹2,20,132 crore in 2024-25," it quoted.
While external risks like geopolitical tensions remain and demand may slowdown, the “domestic fundamentals appear robust” and the “investment outlook remains cautiously optimistic”, it said.
Importantly, the composition of investments – driven largely by greenfield infrastructure projects – signals not only cyclical recovery but also structural capacity building, it added.
However, the next phase of India's growth will be shaped by the ability of firms to convert intentions into execution.
"Thus, sustained monitoring of project implementation and supportive policy measures will be vital to translating this momentum into durable economic gains," it said.
The RBI, in its disclaimer, said the views expressed in the bulletin article are of the authors' and do not represent the views of the central bank.
Follow us
