According to a recent report, India’s real investments experienced an average annual growth of 6.9% from fiscal years 2021 to 2025, exceeding the country’s gross domestic product (GDP) growth of 5.4% during the same timeframe. The Crisil report, named ‘The Road Ahead for Investments,’ highlighted that by fiscal 2025, India’s investment rate surpassed the decadal average, primarily driven by government and household expenditures. The report noted that real investments, measured by gross fixed capital formation, were stronger in both nominal and real terms compared to the average between fiscal years 2016 and 2025.
The majority of this growth stemmed from government and public sector undertakings (PSUs), which saw a combined real investment growth of 13.9% from fiscal years 2022 to 2024. Households, the largest contributors to this growth, also reported significant investment activity, particularly in real estate, with a growth rate of 13.4% in the same period. In contrast, private corporate capital expenditures lagged, recording a mere 8.7% growth in real terms over fiscal years 2022 to 2024. Crisil pointed out that while corporate balance sheets are improving and banks are in a better position to lend, external factors such as U.S. tariffs and global trade tensions have negatively impacted business sentiment.
Looking forward, Crisil warned that government-led investments might slow down in the medium term due to fiscal consolidation. To maintain investment momentum, the report suggested reducing regulatory obstacles, making land and energy more affordable, enhancing contract enforcement, and accelerating free trade agreements (FTAs) to lower tariff barriers and ensure stability for investors.
