Moneycontrol Pro Panorama | Private capex surge signals India’s next growth push

The concentration of capex in infrastructure and power suggests that other sectors—manufacturing in particular—are still hesitant to commit.

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The Reserve Bank of India’s latest forecast has thrown fresh light on an issue that has long haunted India’s growth narrative—the sluggish revival of private investment. Private capital is the ultimate vote of confidence in an economy.

If Indian corporates are indeed ready to commit billions to build factories, power plants, and infrastructure, it reflects not only optimism but also a structural change in the risk appetite of the private sector.

For a country aiming to become a $5 trillion economy, nothing could be more reassuring.

According to the central bank, private sector capital expenditure is expected to jump 21.5 percent in FY26, reaching Rs 2.67 lakh crore, led primarily by infrastructure and power. If this projection holds, it could mark a crucial inflection point in India’s growth cycle, one that investors and policymakers alike have been waiting for.

This is important. For much of the past decade, private corporate investment has remained tepid despite a conducive backdrop of abundant liquidity and government-led capital spending. The scars of the bad loan crisis, followed by pandemic disruptions, kept private players on the sidelines.

What we are now witnessing is a shift in sentiment as companies appear ready to loosen their purse strings in response to rising demand, a healthier banking system, and a more credible policy environment.

Signal of optimism

Going by the RBI report, infrastructure and power sit at the core of this resurgence. India’s energy transition requires colossal investment, from green hydrogen projects to solar parks and transmission corridors.

Private developers, once cautious, are now beginning to scale up commitments, lured by policy clarity and demand visibility. Similarly, infrastructure—from roads to ports and data centres—is attracting private capital, reflecting the confidence that demand will sustain.

This has important spillovers for the broader economy, as capital-intensive projects drive job creation, stimulate allied industries, and improve productivity over the medium term.

The implications for India’s growth are significant. If private capex revives in right earnest, it will complement government spending, which has been the mainstay of investment activity in recent years.

A stronger investment cycle has the potential to lift India’s potential growth rate beyond the current 6–7 percent band, pushing the economy closer to an 8 percent trajectory. More importantly, it diversifies the sources of growth, reducing the burden on consumption and public capex.

So, what does this mean for investors?

Investors should view this development as more than just a headline number. A surge in private investment points to expanding order books for sectors such as capital goods, construction, and engineering services.

That said, the path is not without risks. The concentration of capex in infrastructure and power suggests that other sectors—manufacturing in particular—are still hesitant to commit. This could be due to lingering global uncertainties, muted export demand, or concerns over cost competitiveness.

Unless the investment story broadens across industries such as automobiles, textiles, and chemicals, the revival may appear lopsided. Policymakers must, therefore, ensure that the ecosystem—land, labour, logistics, and policy stability—encourages a wider base of private investment.

Thus, the RBI’s projection should be seen as both a signal and a challenge. A 21.5 percent jump in private capex is no small feat, but converting intent into execution requires consistent policy support, ease of doing business, and resilience against external shocks.

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