Key Points

The report by Crisil, titled ‘The Road Ahead for Investments’, said India’s investment rate in fiscal 2025 was higher than the decadal average, supported mainly by government and household spending.

“India’s real investments grew 6.9 per cent per year (average real growth) over fiscals 2021-25, faster than the 5.4 per cent gross domestic product (GDP) growth,” the report said.

Investments, measured as gross fixed capital formation, stood stronger both in nominal and real terms compared to the average between fiscals 2016 and 2025.

Government and public sector undertakings (PSUs) drove much of this momentum, with their combined real investment growth averaging 13.9 per cent over fiscals 2022–24.

Households, the largest contributors, also saw robust investment activity, largely in real estate, with a growth rate of 13.4 per cent over the same period.

Private corporate capex, however, remained the weak link, showing only 8.7 per cent growth in real terms over fiscals 2022–24.

Crisil noted that while corporate balance sheets are stronger and banks are better placed to lend, external challenges such as US tariffs and global trade frictions have dampened business sentiment.

Looking ahead, Crisil cautioned that government-led investments may moderate over the medium term due to fiscal consolidation.

To sustain momentum, the report recommended easing regulatory hurdles, making land and power more affordable, strengthening contract enforcement, and fast-tracking free trade agreements (FTAs) to reduce tariff barriers and provide stability for investors.

Despite global uncertainties, the report highlighted that India’s domestic conditions -- healthy bank balance sheets, resilient consumption, and infrastructure push -- remain supportive for long-term investment growth.

- IANS