Private Sector Capex to Jump 21.5% in FY26: RBI

India’s private sector capital expenditure (capex) is projected to grow by 21.5% to reach ₹2.67 lakh crore in FY2025–26, according to a recent article published in the RBI’s August 2025 bulletin. This anticipated increase signals a renewed momentum in private investment, particularly in infrastructure and greenfield projects, backed by strong economic fundamentals, policy easing, and better corporate financial health.

Drivers of Rising Private Investment

Healthier Balance Sheets and Funding Access

The RBI bulletin titled “Private Corporate Investment: Growth in 2024-25 and Outlook for 2025-26” highlights several key factors enabling this positive outlook,

• Improved profitability of Indian firms
• Stronger cash reserves and balance sheets
• Diversified funding access, including bank loans, equity markets, and foreign borrowings
• Decline in interest rates, with an expected 100-bps policy rate cut in the current fiscal
• Easing inflationary pressures and improved business sentiment

These conditions collectively foster a conducive environment for private capex.

Infrastructure Leads the Investment Charge

The infrastructure sector, particularly the power industry, continues to attract the largest share of proposed capital investment. This is in line with the government’s ongoing push for infrastructure development, especially in energy, transport, and urban services.

According to data on project phasing across financing sources, capex plans are estimated at ₹2,67,432 crore in FY26, up from ₹2,20,132 crore in FY25. This signals not only a cyclical recovery but also structural growth in the economy, driven by long-term infrastructure creation.

Outlook: Cautious Optimism Amid Global Risks

While the domestic picture appears strong, the RBI article acknowledges external challenges such as,

• Geopolitical tensions
• Global demand slowdown
• Persistent uncertainty in global financial markets
• Despite these risks, the outlook remains cautiously optimistic, supported by the sustained implementation of announced projects and government facilitation.

The article stresses that actual investment outcomes will depend on the timely execution of announced projects and continued policy support from the government and RBI.