Private capex likely to rise 21.5% to ₹2.67 trn in FY26: RBI article

Capital investment by the private sector is likely to rise 21.5 per cent to Rs 2.67 lakh crore in 2025-26 aided by robust macroeconomic fundamentals, and a 100-bps policy rate cut, according to an RBI article.

Despite global uncertainties, Indian firms entered the 2025-26 fiscal year with healthier balance sheets, higher cash buffer, improved profitability, and greater access to diversified funding sources, said the article 'Private Corporate Investment: Growth in 2024-25 and Outlook for 2025-26' published in the Reserve Bank of India's (RBI's) August bulletin.

The continued policy push for infrastructure, sustained disinflation, combined with lower interest rates, easy liquidity conditions, and rising capacity utilisation, is fostering an environment conducive to private investment, it said.

Drawing on 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.

Infrastructure sector continued to attract a major share of envisaged capital investment, led by the 'power' industry.

"The phasing profile of the pipeline projects based on all channels of financing taken together, suggests that the envisaged capex is estimated at Rs 2,67,432 crore in 2025-26 as against Rs 2,20,132 crore in 2024-25," the article said.

The article has been authored by Snigdha Yogindran, Sukti Khandekar, Rajesh B Kavediya and Aloke Ghosh, all from the RBI's Department of Statistics and Information Management.

Looking ahead, the investment outlook remains cautiously optimistic, it said.

"While external risks such as geopolitical tensions, global uncertainty and demand slowdown may influence investment sentiment, the domestic fundamentals appear robust," 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.

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," it said.

The article draws on multiple sources like bank/FI sanctions, external commercial borrowings, and equity issuances, to present a holistic view of investment intentions.

The RBI, however, said the views expressed in the bulletin article are of the authors' and do not represent the views of the central bank.