Investment cycle upbeat & pvt capex likely to jump 54% to `2.45L cr in FY25: RBI paper

Mumbai: The private capital expenditure is likely to jump 54 per cent to Rs 2.45 lakh crore from Rs 1.59 lakh crore in FY24, a paper by the RBI staffers said on Monday. The estimate has been arrived at after analysing investment intentions of private corporates based on the projects sanctioned by banks or financial institutions during FY24, the paper by Kamal Gupta, Rajesh Kavediya and others, said.

“The phasing profile of the pipeline projects finance suggests that the envisaged capex will increase significantly to Rs 2.45 lakh crore in 2024-25 from Rs 1.59 lakh crore in 2023-24,” the paper, which does not represent the central bank’s views, said. “The investment cycle is expected to remain upbeat and its sustainability needs to be watched closely,” it added.

Rising domestic demand, higher capacity utilisation, improved profitability, sustained credit demands, business optimism and the government’s infrastructure development thrust bode well for private capex, the paper said.

The analysis is based on a study that focused exclusively on projects costing over Rs 10 crore, and majority owned by private corporates.

The estimates could differ from the actual private corporate fixed investment data provided in national accounts on modifications in terms of their planned amount and timing, shift in funding to other sources and some shelving as well, the paper said.

In the last few years, watchers have been saying that investments are being led by government or state-run entities, and the private sector has taken a back seat.

The paper said private sector investments are a major driver of India’s long-term growth. “Infrastructure sector continued to attract the major share of envisaged capital investment, led by ‘Roads & Bridges’ and ‘Power’ sectors, reflecting the government push towards infrastructure development,” it said.