Outlook for pvt corporate investment remains cautiously optimistic: RBI study
The outlook for private corporate investment remains cautiously optimistic, with the envisaged capital expenditure (capex) projected to increase substantially to ₹2,67,432 crore in FY26 from ₹2,20,132 crore in FY25, according to a RBI study.
This increase in capex will be aided by robust macroeconomic fundamentals, improved balance sheets, rising capacity utilisation, easy liquidity conditions, infrastructure push and a 100-basis points (bps) policy rate cut starting from February 2025, said RBI officials in an article “Private Corporate Investment: Growth in 2024-25 and Outlook for 2025-26”, published in the latest monthly bulletin.
They noted that while external risks such as geopolitical tensions, global uncertainty and demand slowdown may influence investment sentiment, the domestic fundamentals appear robust.
Importantly, the composition of investments — driven largely by greenfield infrastructure projects — signals not only cyclical recovery but also structural capacity building, noted the officials Snigdha Yogindran, Sukti Khandekar, Rajesh B Kavediya and Aloke Ghosh..
“The ability of firms to convert intentions into execution will be critical in shaping the next phase of India’s growth. Thus, sustained monitoring of project implementation and supportive policy measures will be vital to translating this momentum into durable economic gains,” they said.
FY25: tepid investment optimism
The total cost of projects sanctioned by banks/FIs at ₹3,67,973 crore for FY25, lower than the previous year’s ₹3,91,003 crore, points to tepid investment optimism of private corporates, per the authors assessment.
During 2024-25, about 907 projects got assistance from banks/FIs as compared to 944 projects sanctioned during the previous year.
The article assessed that during FY25, 448 private companies, which did not avail of any financing from banks/FIs for capex projects, raised ₹96,966 crore through ECBs (external commercial borrowings) for capex purpose, while 229 other companies raised ₹32,295 crore through domestic equity issuances under the initial public offering (IPO) route for funding their capex needs.
Overall, investment plans of 1,584 projects were made during FY25, with investment intentions of ₹4,97,235 crore, as against 1500 projects in FY24 with investment intentions of ₹5,47,734 crore.
Purpose-wise investment
The officials said investment in green field (new) projects accounted for the lion share of about 92 per cent in the total cost of projects financed by banks/FIs during FY25, in line with the trend seen in the past.
“Greenfield investment generally brings new and additional resources and assets to the firms and leads to gross fixed capital formation (GFCF).
“Higher investment in green field projects thus points to likely capacity expansion by private corporates going forward. Investment in expansion and modernisation of existing projects accounted for 7.8 per cent share in the total project cost,” the officials said.
Industry-wise distribution of projects sanctioned during FY25 indicates that the infrastructure sector remained the major sector accounting for 50.6 per cent share in the total cost of projects, primarily driven by investment in ‘Power’, followed by ‘Road & bridges’, per their analysis.
However, the share of infrastructure related projects in the total cost of projects was lowest in the last ten years. Beside infrastructure, among the other major industries, chemicals & pesticides, construction, electrical equipments and metal & metal products also accounted for the sizable share in the total cost of projects.
State-wise
The state-wise distribution of projects sanctioned revealed that the top five States — Gujarat, Maharashtra, Andhra Pradesh, Rajasthan and Uttar Pradesh — together accounted for about 60 per cent share in total cost of projects during FY25. The share of Gujarat, Maharashtra and Rajasthan improved significantly from the previous year.
Published on August 29, 2025
