Investment outlook remains cautiously optimistic going ahead: RBI study

Lower investment announcements amid uncertain demand conditions, along with higher cash buffer, points to a cautiously optimistic outlook for private investment activity in the country, a study authored by Reserve Bank of India (RBI) staff in the August bulletin of the central bank said.“Looking ahead, the investment outlook remains cautiously optimistic,” the study highlighted.Having said that, the study also highlighted that India Inc has entered the current financial year (FY26) with healthier balance sheets, higher cash buffer, improved profitability, and greater access to diversified funding sources, despite global uncertainties.And a host of factors, including policy support for infrastructure, sustained disinflation, lower interest rates following 100 basis points policy rate reduction by the central bank, easy liquidity conditions, and rising capacity utilisation, are creating a conducive environment for private investment.As a result, the phasing profile of pipeline projects financed through all suggests that the envisaged capex could increase substantially to ?2.67 trillion in FY26 from ?2.20 trillion in FY25.The study also cautioned that external risks such as geopolitical tensions, global uncertainty and demand slowdown may influence investment sentiment of India Inc, but domestic fundamentals appear robust.

While the composition of investments, driven largely by greenfield infrastructure projects, signals not only cyclical recovery but also structural capacity building, the ability of Indian firms to convert intentions into execution will be critical in shaping the next phase of the country’s growth, the study pointed out.“Thus, sustained monitoring of project implementation and supportive policy measures will be vital to translating this momentum into durable economic gains,” it said.In FY25, about 907 projects got assistance from banks and financial institutions, with a total cost of projects of ?3.67 trillion, as compared to 944 projects sanctioned during the previous year (FY24) having a total cost of ?3.91 trillion.Additionally, in FY25, 448 private companies, which did not avail of any financing from banks or financial institutions for capex projects, raised ?96,966 crore through external commercial borrowings for capex purpose, while 229 other companies raised ?32,295 crore through domestic equity issuances under the initial public offering (IPO) route for funding their capex needs.Overall, investment plans of 1,584 projects were made during FY25, with investment intentions of ?4.97 trillion, as against 1,500 projects in FY24 with investment intentions of ?5.47 trillion, the study said.

The study also pointed out that Indian corporates have undergone a phase of balance sheet repair, aided by deleveraging, improved cash flows, and strong profitability across several sectors.It also highlighted that recent trends in high-frequency indicators — such as rising imports of capital goods, improved capacity utilisation, and increased flows in corporate bond markets — signal renewed investment appetite among firms. Additionally, the banking sector, with its improved asset quality and abundant liquidity, are further enhancing the credit environment.Additionally, sector-specific policies, such as the Production-Linked Incentive schemes, energy transition investments, and digital infrastructure expansion, are incentivising corporates to undertake fresh investments, the study said.

-Business standard 01st September,2025

Household debt up, but India still lags emerging-market economies: RBI

Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...

External spillovers likely to hit India's financial system: RBI report

While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...

Healthy balance sheets augur well for economy: RBI Governor Sanjay Malhotra

Large tariffs by the United States administration and elevated geopolitical risk have increased near-term global financial stability risks, and along with weather events pose downside risks to domestic growth, Reserve Bank of India(RBI) Governor Sanjay Malhotra said in the foreword to the Financial Stability Report released today.Noting that domestic growth momentum is buoyed by strong domestic drivers, sound macroeconomic fundamentals and prudent policies, Malhotra said: “External spillovers and weather-related events could pose downside risks to growth.”On the other hand, he said the outlook for inflation is benign, and there is greater confidence in the durable alignment of inflation with the Reserve Bank’s target.Commenting that the structural shifts reshaping the global economy are making policy intervention challenging, the Governor emphasised the need for central banks and financial sector regulators to remain vigilant, prudent and agile in safeguarding their economies and...

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