MUMBAI: Private capital expenditure, which has been missing for more than a decade after the investment spree during the later part of the first decade and the initial years of the second decade of the millennium, is finally back with the project finance pipeline.
It suggests a significant increase in capital expenditure to Rs 2.45 lakh crore in the current fiscal, up from Rs 1.59 lakh crore in the previous 12 months.
Rising domestic demand and capacity utilisation, improved profitability of corporate and healthier balance sheets of banks, sustained credit demand, business optimism and government’s thrust on infrastructure development, along with policy measure to encourage investment activities, bode well for private capital investment cycle and reflects conducive investment climate and growth potential for the economy and facilitates economic progress, the Reserve Bank said in its latest bulletin released on Monday. However, the views in the bulletin articles are not of the authors and not of the central bank.
The projection is based on an analysis of investment intentions of private corporates on the basis of projects sanctioned by banks/financial institutions during fiscal 2024, wherein the total envisaged financing cost of projects reached a new high of Rs 3.91 lakh crore, of which, as much as 54% are to be invested by the year-end.
“The phasing profile of the projects finance pipeline suggests that the envisaged capex will increase significantly to Rs 2.45 lakh crore in 2024-25 from Rs 1.59 lakh crore in 2023-24,” the article said.
During FY24, about 944 projects got assistance from lenders with a record high total cost of projects of Rs 3,90,978 crore compared to 547 projects sanctioned during the previous year having total cost of Rs 2,66,546 crore.
During 2023-24, 438 private companies, which did not avail of any financing, raised Rs 1,68,396 crore through ECBs for capex purpose, while 123 other companies raised Rs 6,310 crore through domestic equity issuances under IPOs for funding their capex needs.