Private Capex Cycle Revival Unlikely To Materialise In 2025: RBI Survey

A recent survey by the Reserve Bank of India (RBI) has revealed that more than half of the respondents do not foresee a revival in the private capital expenditure (capex) cycle within the next year.

This contrasts with the central bank’s optimistic outlook, which anticipates an economic pickup in the second half of 2025.

The 27th round of the RBI’s Systemic Risk Survey (SRS), conducted in November 2024, involved 51 respondents, including economists and market participants.

The survey focused on key risks facing the Indian financial system, including global geopolitical conflicts, commodity price fluctuations, and tightening interest rates in advanced economies.

Respondents were also asked about domestic growth, inflation, and capital flows.

The survey revealed that 52 per cent of respondents do not expect a revival of the private capex cycle in the coming year, while 44 per cent believe a revival is likely within that time.

This sentiment stands in contrast to the RBI Governor Sanjay Malhotra’s assessment in the Financial Stability Report (FSR), which stated that India’s economic growth is set to revive in 2025, bolstered by strong consumer and business confidence.

“Prospects for the Indian economy are expected to improve after the slowdown in the pace of economic activity in the first half of 2024-25,” Malhotra had said.

He further noted, “Consumer and business confidence for the year ahead remain high and the investment scenario is brighter as corporations step into 2025 with robust balance sheets and high profitability.”

The survey also highlighted growing concerns over global economic uncertainty and its potential impact on India’s macro-financial stability.

Around 60 per cent of respondents expected a ‘high’ to ‘medium’ impact on India from global economic challenges.

On the domestic front, 40 per cent of respondents predicted a marginal deterioration in credit demand over the next six months.

Overall, macroeconomic risks were perceived to have increased, driven by concerns over growth, inflation, capital flows, and weak consumption demand.

The survey identified seven key risks to India’s financial stability, including geopolitical conflicts, global inflation, capital outflows, trade tariffs, domestic growth slowdowns, climate risks, and cybersecurity threats.

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