The capex push in the previous year, which spurred growth to 8.2 percent, was also a product of private capex growth alongside government capex, according to a paper by RBI researchers, published in the Monthly Bulletin.

The paper finds that the push is likely to continue further in the current fiscal with envisaged capex set to increase 54 percent to Rs 2.45 lakh crore from Rs 1.59 lakh crore in the previous year.

“Rising domestic demand and capacity utilisation, improved profitability of corporates, 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,” the paper said.

The envisaged capex is calculated based on phasing profile of pipeline projects, which in turn is calculated from the money raised via different routes.

The analysis considers all projects with a value of Rs 10 crore and above funded via banks, financial institutions, external commercial borrowings and public offerings and rights issues.

“Based on the phasing profile of projects sanctioned by banks/FIs till 2023-24, the envisaged capex recorded a significant increase of 41.7 percent to ₹2,80,975 crore during 2023-24,” the report said.

A total of Rs 3.91 lakh crore of projects were approved in FY24.

“Investment in green field (new) projects accounted for the lion share of about 89 per cent in the total cost of projects financed by banks/FIs during 2023- 24, in line with the recent trends, which points to likely capacity expansion by private corporates going forward,” said the report.

Data on investment intentions based on capital raised shows that the 1,505 investment plans were made in FY24 with intentions worth Rs 5.66 lakh crore compared with 982 projects in FY23 and an investment intention of Rs 3.51 lakh crore.

One of the worries for the government resonated in data from RBI report as well, with infrastructure (road and bridges and power) accounting for nearly half of projects sanctioned by banks and financial institutions in FY24.

Experts have been highlighting that a broad basing of capex is expected to help the economy.

“Overall, the investment cycle is expected to remain upbeat and its sustainability needs to be watched closely,” the RBI paper noted.

However, it also pointed out that global financial market volatility, geopolitical concerns and fragmentation could dampen investment plans.

The government in its recent Budget continued the thrust on capex allocating Rs 11.11 lakh crore for FY25, a 17 percent increase from the previous year.