New Delhi [India], March 7 : Increased private sector participation is necessary for balanced and sustainable investment momentum, said Crisil in its India Outlook.
"With the government normalising capex, it is time for the private sector to take the lead in furthering the investment momentum," the report added.
According to the rating agency, public sector investments and spending made by the government in the Union Budget announcements after the pandemic have paid off, with fixed investments being the key driver of GDP growth until the fiscal year 2024.
The report highlighted that now there is a greater shift in the policy strategy towards incentivizing private corporate investments.
After rising from the pre-pandemic average of 1.7 per cent of GDP, central government capex is budgeted to stabilize at 3.1 per cent of GDP in fiscal year 2026, the same as fiscal year 2025.
The report said that while central government capex remains supportive, the focus should also be on reducing cost and time overruns.
As of December 2024, 63.7 per cent of central sector projects totalling Rs 150 crore and above had time overruns, higher than the 29.8 per cent of projects on time. And 41.1 per cent of projects faced cost overruns.
"Here, creating a pipeline of shovel-ready projects and better coordination with states will help get the best bang for the buck," the report added.
The rating agency further added that the government is also taking steps to encourage private sector investments. Total allocation for the Production Linked Incentive (PLI) schemes is budgeted to rise 87 per cent on-year in fiscal 2026, particularly in sectors such as electronics, textiles, automobiles, and components, which shows the efforts.
In its outlook, the rating agency said that India's real gross domestic product (GDP) growth would be steady at 6.5 per cent in the fiscal year 2026 despite uncertainties stemming from geopolitical turns and trade-related issues led by US tariff actions.
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