Banks funding data for Private sector projects shows jump in private capex: Kotak Mutual Fund

New Delhi [India], February 11 : Funding for private sector projects has been witnessing significant growth, with bank approvals rising at a compound annual growth rate (CAGR) of 20 per cent since the pre-COVID period. This trend highlights a strong outlook for private capital expenditure (capex), according to a report from Kotak Mutual Fund.
According to the data in the report, sanctioned project costs have surged from Rs 1,168 billion in FY21 to Rs 5,657 billion in FY24. This sharp increase signals growing confidence among private players, as businesses continue to expand investments.
It said "Bank approval for private projects has risen by 20 per cent CAGR since Pre-Covid, pointing towards a robust private capex outlook".
The upward trajectory indicated that the corporate sector is ramping up its spending on new projects, supported by improved economic conditions and a more favourable lending environment.
The data suggests that private sector capex had remained relatively stable between FY14 and FY19, fluctuating around Rs 2,000- Rs 2,300 billion annually. However, after the initial COVID-19 slump in FY21, investment picked up significantly, marking a strong post-pandemic recovery. The pace of bank approvals for private projects is showing an encouraging sign, reflecting optimism in industrial growth and infrastructure development.
This along with the increasing trend of government capital expenditure is boosting economic growth towards an upward trajectory.
A comparison of year-on-year growth trends in cumulative central government capex between 2019-20 and 2024-25 indicates a sharp recovery post-June 2024.
In FY 25, Initially government capex faced a downturn due to the general elections and extreme weather conditions. However, the trajectory has reversed since September 2024, showing strong growth momentum towards the end of the fiscal year.
The analysis also suggests that government capex is likely to be "back-ended" in FY25, meaning a significant portion of spending will take place later in the fiscal year. This trend is in line with historical patterns where government expenditure picks up pace after elections and policy adjustments.
The twin acceleration in both private and public sector investments bodes well for India's economic growth. While private players are aggressively expanding their capital investments, government spending will likely provide additional support in the coming months.
Together, these trends indicate a promising outlook for infrastructure, industrial expansion, and overall economic activity.