Private sector capital expenditure is set to rebound and surge in 2025-26, driven by a global economic revival, expected post-election political stability, and rising demand, according to Amish Mehta, MD&CEO of CRISIL.

“If you are lucky, we might even see this (private investment surge) happening earlier. I do see the full blossoming of private capex in 2025, as elections would have been over by then. Also, capacity utilisation, now at 70 per cent, will start hitting 75-80 per cent-plus levels. We also expect a global recovery to play out in 2025. This will all start putting confidence in capex,” Mehta told businessline in an interview here.

Global analytics company CRISIL sees a global slowdown in 2024 and expects global growth to be lower in the next calendar year vis-a-vis this year. “We expect the global economy to pick up in 2025. Today, there is lot of uncertainty.”

For any promoter to commit large resources, one would want stability in the general environment. If you are purely domestic, it is different. But today, with increased globalisation, the rebound is much more global dependent. But in the next one-and-a-half years, there will be a lot more clarity,” he said.

Noting that the government has been the driving force having front-loaded capex, Mehta said private investments were now being done in a measured way. “It’s not herd mentality and not everybody wants to do capex. Today, we are getting PLI-driven or regulatory-driven capex”.

Mehta, who was in the Capital for the launch of CRISIL’s Infrastructure Yearbook 2023, said both corporates and banks are in a good place and, therefore, there will be no constraints in availability of funds. 

“Today, if anybody wants to put a big capex, the balance sheets are very strong, as most large companies are deleveraged and strong,” he said. 

Also, banks’ ability to lend has gone up, capital adequacy has gone up and, in fact, they are looking for bankable projects. “Banks are looking for opportunities. They are happy to lend, which means money is available,” he added.

Also financial investment surplus going into MF, insurance and pension funds are rising. Money will be available for those who want to do capex. “It’s a decision that has to be made,” he said.

CRISIL expects the Indian economy to register 6 per cent GDP growth, with some upside. It sees the Indian economy doubling in the next seven years by 2030, clocking an average 6.7 per cent GDP growth in the next seven years. Per capita income in India is likely to touch $4,500 in the next seven years, based on an average 6.7 per cent GDP growth. “India should be able to accelerate its growth provided we get lots of things right. The potential is there. This will require policy, investments, regulatory enablement and execution at scale. At 6.7 per cent growth, this will itself take you to the middle-income category,” he said.

CRISIL expects India’s infrastructure spend to nearly double by 2030 — from an estimated ₹66.7 lakh crore between 2017 and 2023, to ₹142.9 lakh crore between fiscals 2024 and 2030. It expects the private sector to largely focus on the energy and transport sectors.

“We see lot of action on green investments. Of the total projected infrastructure spend, as much as ₹36.6 lakh crore is expected to be green investments, a 5X rise over fiscals 2017-23. The green space will be led by renewable energy (₹30.3 lakh crore), followed by transportation(₹6.3 lakh crore).

Asked as to why CRISIL was sticking to its 6 per cent GDP growth forecast for the current fiscal, Mehta said this was due to two-three reasons. 

“We want to see how food price inflation plays out. We also want to see how the increased interest rate impacts consumption. The third reason is that the global economy will slow down, compared to what was expected earlier,” Mehta said.

He said a hike in interest rates in the recent period has not impacted consumption as yet. “At some stage, it will have an impact on consumption. An increase in interest rates by about 250 basis points would start hitting EMIs and impact consumers’ pockets in the coming days,” he added.

Related Topics