Delhi Delhi: Increasing private sector participation is essential for a balanced and sustainable investment momentum, Crisil said in its India Outlook. “With the government normalising capital expenditure, the time has come for the private sector to take a leading role in driving the investment momentum,” the report said. According to the rating agency, public sector investment and spending by the government in the Union Budget announcements after the pandemic have made gains, with fixed investment being the key driver of GDP growth till FY24. The report highlights that there is now a major shift in policy strategy towards encouraging private corporate investment.
After growing from an average of 1.7 per cent of GDP before the pandemic, central government capital expenditure is budgeted to stabilise at 3.1 per cent of GDP in FY26, the same as in FY25. The report said central government capital expenditure remains supportive, but focus should also be on reducing cost and time overruns. As of December 2024, 63.7 per cent of the total central sector projects worth Rs 150 crore and above had time overruns, higher than 29.8 per cent of projects that were running on time. And 41.1 per cent of projects faced cost overruns.
“Here, creating a pipeline of ready projects and better coordination with states will help make the best use of money,” the report said.
The rating agency further said the government is also taking steps to encourage private sector investment. The total allocation for production-linked incentive (PLI) schemes is estimated to grow 87 per cent year-on-year in FY26, especially in sectors such as electronics, textiles, automobiles and components, reflecting efforts by the government to boost investment in the country.
