Executive Summary:
This document addresses Lok Sabha Unstarred Question No. 3639 regarding private sector capital expenditure (capex). It provides data on capex trends and outlines government measures to enhance investor confidence and encourage private participation in key sectors. The data cited spans from 2018-19 to 2023-24, with investment intentions data up to August 2024 and mentions steps announced in Budget 2025-26.
Key Points / Main Content:
* **Private Sector Capex Data:**
* RBI does not compile national-level private sector capex statistics; MoSPI does.
* Gross fixed capital formation of private non-financial corporations increased by approximately 56% between 2018-19 and 2023-24.
* Net fixed assets of private limited companies registered steady growth between 2021-22 and 2023-24.
* The number and total cost of projects sanctioned by banks and FIs more than doubled between 2021-22 and 2023-24.
* **Government Measures to Enhance Private Participation:**
* Focus on capital expenditure, infrastructure development, financial sector reforms, and ease of doing business.
* Initiatives include Production-Linked Incentive (PLI) schemes and credit guarantee programmes.
* FDI liberalization across sectors such as Defence, Retail, and Insurance, with regular review of the FDI policy.
* Investments in infrastructure supported by instruments like InvITs, REITs, IDFs, and PPP models under the VGF scheme.
* Institutions like NIIF and NaBFID provide long-term infrastructure financing.
* Budget 2025-26 announced steps like the Partial Credit Enhancement (PCE) facility, Urban Challenge Fund, and expansion of the Harmonised Master List of infrastructure.
Impact Analysis:
* **Investors:**
* *Impact:* Enhanced confidence through policy interventions, infrastructure development, and financial sector reforms. Increased investment opportunities in key sectors due to government incentives and support.
* *Action Required:* Evaluate opportunities arising from PLI schemes, credit guarantee programs, and infrastructure investments. Consider investments in sectors with liberalized FDI policies.
* **Private Non-Financial Corporations:**
* *Impact:* Benefit from increased capital formation, improved access to financing, and streamlined business regulations. Opportunities for growth and expansion due to government support for infrastructure and key sectors.
* *Action Required:* Leverage government schemes and incentives to increase capital expenditure. Explore opportunities for infrastructure development and PPP projects.
* **Banks and Financial Institutions (FIs):**
* *Impact:* Increased project sanctions and financial activity due to enhanced investor confidence and government support. Opportunities to provide long-term financing for infrastructure projects.
* *Action Required:* Increase lending to private sector capex projects, especially in infrastructure and key sectors. Participate in financing through NIIF, NaBFID, and other government-backed initiatives.
* **Ministry of Statistics and Programme Implementation (MoSPI):**
* *Impact:* Continued responsibility for compiling and publishing data on private sector capital investment.
* *Action Required:* Maintain accurate and timely data collection and dissemination on private sector capex trends.
* **Reserve Bank of India (RBI):**
* *Impact:* Provides data on investment intentions of private corporates and monitors financial performance.
* *Action Required:* Continue to monitor and provide data on investment intentions and financial performance of private corporates.
Key Entities Referenced
Reserve Bank of India: The central bank of India, referred to here in the context of compiling data on private sector capital expenditure.
Ministry of Finance: A department of the Government of India responsible for economic and financial matters.
Ministry of Statistics and Programme Implementation: A ministry of the Government of India responsible for the collection and publication of statistics related to economic and social development.
Ministry of Corporate Affairs: A ministry of the Government of India that regulates corporate affairs.
Production-Linked Incentive schemes: Government initiatives designed to boost domestic manufacturing and attract investment.
Foreign Direct Investment: An investment made by a firm or individual in one country into business interests located in another country.
National Investment and Infrastructure Fund: An investment platform established by the Indian government to support infrastructure development.
National Bank for Financing Infrastructure and Development: A development finance institution in India focused on long-term infrastructure financing.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF ECONOMIC AFFAIRS
LOK SABHA
UNSTARRED QUESTION No. 3639
TO BE ANSWERED ON 11 AUGUST 2025/ SRAVANA 20, 1947 (SAKA)
ENCOURAGEMENT OF PRIVATE SECTOR CAPEX
3639. Dr. Pradeep Kumar Panigrahy:
Will the Minister of FINANCE be pleased to state:
(a) whether the recent RBI data indicates that private sector capex is yet to gain broad-based
traction despite policy interventions; and
(b) the additional measures taken/to be taken by the Government to enhance the confidence of
investors and crowd-in private participation in the key sectors?
ANSWER
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a): The Reserve Bank of India (RBI) has informed that it does not compile national-level
statistics on private sector capital expenditure (capex) and that the Ministry of Statistics and
Programme Implementation (MOSPI) compiles and publishes the data on private sector capital
investment. As per MoSPI data, the gross fixed capital formation of private non-financial
corporations at current prices increased by approximately 56%, rising from around ₹19.01 lakh
crore in 2018–19 (pre-pandemic) to ₹29.68 lakh crore in 2023–24.
Based on financial statement data of corporates received from the Ministry of Corporate
Affairs, the RBI has further noted that net fixed assets of private limited companies registered
a steady growth of 7.6%, 10.3%, and 10.2% in 2021–22, 2022–23, and 2023–24, respectively.
Additionally, the RBI compiles data on investment intentions of private corporates using
information received from select banks and financial institutions (FIs). As per the latest data
published in the August 2024 issue of the RBI Bulletin, the number of projects sanctioned by
banks and FIs more than doubled, from 401 in 2021–22 to 944 in 2023–24. During the same
period, the total cost of sanctioned projects rose significantly from ₹1.4 lakh crore to ₹3.9 lakh
crore.(b): The Government has taken several measures to enhance investor confidence and crowd-in
or encourage private sector participation, with a focus on capital expenditure, infrastructure
development, financial sector reforms and ease of doing business. Key initiatives include
Production-Linked Incentive (PLI) schemes, credit guarantee programmes, FDI liberalisation
across sectors such as Defence, Retail and Insurance, and regular review of the FDI policy.
Significant investments in infrastructure—supported by instruments like Infrastructure
Investment Trusts (InvITs), Real Estate Investment Trusts (REITs) and Infrastructure Debt
Funds (IDFs), and Public-private partnerships (PPP) models under the Viability Gap Funding
(VGF) scheme—are aimed at crowding in private capital. Institutions such as National
Investment and Infrastructure Fund (NIIF) and National Bank for Financing Infrastructure and
Development (NaBFID) provide long-term infrastructure financing. Further, Budget 2025–26
announced steps like the Partial Credit Enhancement (PCE) facility, Urban Challenge Fund,
and expansion of the Harmonised Master List of infrastructure to sustain momentum and
investor interest.
***