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Private capex revival remains unlikely in 2025, says RBI survey
Industry News- Jan 03,25
The findings differ from the RBI’s Financial Stability Report (FSR), which indicated that India’s economic growth is poised to recover in 2025, driven by strong consumer and business confidence.
A recent survey by the Reserve Bank of India (RBI) has revealed that more than half of the respondents do not expect a revival of private capital expenditure (capex) in the coming year. This contrasts with the central bank's optimistic forecast that economic activity will pick up in the second half of 2025.
In the 27th round of the RBI's Systemic Risk Survey (SRS), conducted in November 2024, 52% of respondents—including economists and market participants—believe that the capex cycle will not revive in the next year. Only 44% foresee a potential revival in that timeframe. The survey, which sought views on key risks facing the Indian financial system, also highlighted concerns around global factors such as geopolitical conflicts, commodity price risks, and tightening interest rates in advanced economies.
The findings differ from the RBI’s Financial Stability Report (FSR), which indicated that India’s economic growth is poised to recover in 2025, driven by strong consumer and business confidence. Sanjay Malhotra, Governor, RBI stated that the slowdown in economic activity during the first half of 2024-25 is expected to reverse, with robust balance sheets and high profitability among corporations helping the revival.
The SRS also assessed the potential impact of global economic uncertainties on India's macro-financial stability. On the domestic front, 40% of respondents expect a slight decline in credit demand over the next six months, while 60% anticipate a medium to high impact on India from global uncertainties.
While 80% of respondents remain confident about the financial sector’s outlook, with a positive or stable view of the Indian banking sector, macroeconomic risks are seen to have increased, mainly due to concerns over growth, inflation, capital flows, and weak consumption demand.
Respondents highlighted seven key risks to India's financial stability, including geopolitical conflicts, global growth and inflation challenges, capital outflows, trade tariff increases, domestic growth and consumption slowdowns, climate risks, and cybersecurity threats.
(ET)
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