The total cost of private sector projects sanctioned by banks and financial institutions declined by 6% to Rs 3.67 lakh crore in FY 2024–25, from ?3.91 lakh crore in the previous year, according to a study by Reserve Bank of India economists, which points to low investment optimism among private corporates.
The number of projects sanctioned also decreased to 907 from 944 the previous year. Overall, 1,584 projects were planned in FY25 with investment intentions of Rs 4.97 lakh crore, compared to 1,500 projects worth Rs 5.47 lakh crore in FY24.“Lower investment announcements amid uncertain demand conditions, along with higher cash buffer points to a cautiously optimistic outlook for private investment activity,” the study said.
Nearly half the companies in the private sector financed their capex using the external commercial borrowing route, amounting to Rs 96966 crore, and one-third tapped the IPO route, amounting to Rs 32295 crore for funding their capex needs, shows a study by the RBI.
Greenfield projects accounted for 92% of the total cost of projects financed by banks and FIs in FY25, consistent with trends seen in previous years.
Investment in expansion and modernisation of existing projects made up 7.8%. “Greenfield investment generally brings new and additional resources and assets to the firms and leads to gross fixed capital formation. Higher investment in green field projects thus points to likely capacity expansion by private corporates going forward, the study stated.
Ten mega projects (Rs 5,000 crore and above) and 75 large projects (Rs 1,000 crore –5,000 crore) were sanctioned during the year, contributing 25.8% and 37.2% respectively to the total project cost.
The authors Aloke Ghosh, Snigdha Yogindran, Sukti Khandekar, Rajesh B. Kavediya - noted that the ability of firms to “convert intentions into execution” will be key to sustaining growth. “Sustained monitoring of project implementation and supportive policy measures will be vital to translating this momentum into durable economic gains,” they said.
Capital expenditure by the private sector is projected to rise 21% to Rs 2.67 lakh crore in FY 2025–26, based on pipeline projects financed through various channels.
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The number of projects sanctioned also decreased to 907 from 944 the previous year. Overall, 1,584 projects were planned in FY25 with investment intentions of Rs 4.97 lakh crore, compared to 1,500 projects worth Rs 5.47 lakh crore in FY24.“Lower investment announcements amid uncertain demand conditions, along with higher cash buffer points to a cautiously optimistic outlook for private investment activity,” the study said.
Nearly half the companies in the private sector financed their capex using the external commercial borrowing route, amounting to Rs 96966 crore, and one-third tapped the IPO route, amounting to Rs 32295 crore for funding their capex needs, shows a study by the RBI.
Greenfield projects accounted for 92% of the total cost of projects financed by banks and FIs in FY25, consistent with trends seen in previous years.
Investment in expansion and modernisation of existing projects made up 7.8%. “Greenfield investment generally brings new and additional resources and assets to the firms and leads to gross fixed capital formation. Higher investment in green field projects thus points to likely capacity expansion by private corporates going forward, the study stated.
Ten mega projects (Rs 5,000 crore and above) and 75 large projects (Rs 1,000 crore –5,000 crore) were sanctioned during the year, contributing 25.8% and 37.2% respectively to the total project cost.
The authors Aloke Ghosh, Snigdha Yogindran, Sukti Khandekar, Rajesh B. Kavediya - noted that the ability of firms to “convert intentions into execution” will be key to sustaining growth. “Sustained monitoring of project implementation and supportive policy measures will be vital to translating this momentum into durable economic gains,” they said.
Capital expenditure by the private sector is projected to rise 21% to Rs 2.67 lakh crore in FY 2025–26, based on pipeline projects financed through various channels.
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