Private capex revival still not on horizon, says RBI survey

More than half of the respondents surveyed in the Reserve Bank of India’s (RBI) Systemic Risk Survey (SRS) do not expect a revival in the private capital expenditure cycle in the coming year, contrary to the central bank’s own assessment that economic activity is likely to pick up in the second half of this year.

In the 27th round of the SRS which was conducted in November 2024, the RBI surveyed 51 respondents including economists and market participants, on major risks faced by the Indian financial system. The survey gauged participant’s perceptions of global risks like geopolitical conflicts, commodity price risks and tightening interest rates in advance economies. Among macroeconomic factors respondents gave their opinion on risk perception due to domestic growth, inflation and capital flows.

Revival of capex which has been the moot question for better part of the last two decades, remains a weak spot with 52% of the respondents saying that it is unlikely to revive in the next on year, while 44% expecting a likely revival within that time period, the survey showed.


The survey contrasts with governor Sanjay Malhotra’s foreword in the RBI’s bi annual Financial Stability Report (FSR) which said that India’s economic growth is poised for a revival in 2025, supported 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 in the FSR released on Monday. “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,” Malhotra said.

In addition to key global and macroeconomic factors, the current round of the survey also gauged sentiments on the impact of rising global economic uncertainty on India’s macro-financial stability and the revival of private capex cycle.

On the domestic front, 40% of the respondents see a marginal deterioration in credit demand over the next six months while 60% expected a ‘high’ to ‘medium’ impact on India due to global economic uncertainty. Financial sector prospects are perceived to be better with 80% of the respondents expressing either a higher or a similar level of confidence while 60% of the respondents expect better or similar prospects for the Indian banking sector over a one-year horizon.

Overall the survey showed macroeconomic risks were perceived to have inched up, driven by growth and inflation concerns, volatility in capital flows and a weak consumption demand outlook.

Going forward, respondents identified seven risks to domestic financial stability, namely, geopolitical conflicts, global growth and inflation concerns, capital outflows and impact on rupee, increase in trade tariffs and impact on global trade, slowdown in domestic growth and consumption demand, climate risks and cybersecurity concerns.