RBI Forecasts Private Capex to Rise to ₹2.45 Trillion in FY25

The Reserve Bank of India (RBI) study forecasts a substantial increase in private capital expenditure, projecting it to reach ₹2.45 trillion in FY25, up from ₹1.59 trillion in FY24. This rise is attributed to robust investment intentions and the ongoing emphasis on infrastructure development.

Key Findings

The RBI study reveals that the infrastructure sector, particularly roads & bridges and power, will attract the largest share of this investment. The study noted a significant rise in sanctioned projects, with a record high of ₹3.90 trillion in FY24. Of this, 54% is planned for FY23, 30% for FY25, and the remaining 16% for subsequent years.

Investment Intentions

The study, authored by Kamal Gupta and Rajesh Kavediya, analyzed projects costing over ₹10 crore. It found that investment intentions surged to ₹5.65 lakh crore in FY24, up from ₹3.51 lakh crore in FY23. This includes 11 mega projects exceeding ₹5,000 crore and 77 large projects over ₹1,000 crore each.

Sectoral and Regional Focus

Infrastructure remains a major focus, driven by the government’s development initiatives. The top five states—Gujarat, Maharashtra, Karnataka, Andhra Pradesh, and Uttar Pradesh—account for approximately 55% of the total sanctioned project cost.

Funding Sources

Private sector financing includes ₹1.68 lakh crore raised through external commercial borrowings and ₹6,310 crore from domestic equity issuances. The paper highlights that private sector investments are pivotal for India’s long-term growth, with 89% of proposals being greenfield projects.

Challenges and Outlook

The study acknowledges potential challenges such as global financial market volatility and geopolitical tensions. Despite these, the investment cycle is expected to remain strong, though its sustainability will need careful monitoring.