Owing to the current uncertain business climate due to tariffs, the revival in private capital expenditure (capex) in India is expected only in the next financial year, according to S&P Global Ratings.
"We are projecting $800-850 billion of private capex in the next five years, but I do not see it really happening this year. So, I think it is probably going to get shifted more to next year," Geeta Chugh, managing director, S&P Global Ratings, said at a media interaction.
According to S&P Global's assessment, the persistent uncertainty is delaying private investment decisions, and causing volatility in capital flows, financial markets, and currency exchange rates. This trend was expected to continue as the tariff landscape evolves.
The economic outlook of India for 2025-26 (FY26) and beyond will be influenced by global tariff shocks as well as how domestic buffers and policy levers can be shaped to provide a cushion, it added.
For India to achieve developed country status by 2047, the government and other public stakeholders must balance enhancing domestic growth drivers, attracting foreign capital, and improving external market access.
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The growth of central government capex is still budgeted at a respectable 10.1 per cent for FY26. Unlike in FY25, the Indian government has prioritised capex since the outset of FY26.
On the credit growth estimate for FY26, Chugh said: "We are projecting about 11-12 per cent growth this year. If you look at a medium term, we think 12-13 per cent credit growth is certainly possible." This could actually happen, if there is a shift in corporate fundraise from the public debt capital markets to the banking sector.
There were certain segments, particularly on the retail side, where there was significant slowdown in growth. In unsecured personal loans -- particularly loans to below prime customers or loans that are less than ₹50,000 -- significant buildup of delinquencies and high leverage have been seen, she said, adding that the story is similar on the microfinance side.
Dwelling on private credit support to corporate activity, S&P Global said it was poised for strong growth, driven by a significant financing gap left by traditional lenders and strengthened by domestic insolvency frameworks.
"Private credit was close to 0.6 per cent of the gross domestic product (GDP) as of March 2025. We think it could become more material over a period of time." Chugh said. In large developed markets like the US, private credit is anywhere between 5 per cent and 10 per cent of the banking sector size.
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