The private capital expenditure growth in India remained robust in the last five years from FY21 to FY25E, reporting a CAGR of 19.8 per cent, according to a report by HDFC Securities. The report highlighted that private capex growth was strong during this period, but it did not reflect in the credit growth of the banking system. This was because almost the entire capital expenditure was financed through strong cash flows from operations, reducing the need for bank credit. It said "private capex growth has been robust from FY21 to FY25E, reporting a CAGR of 19.8 per cent.... Private capex growth wasn't reflected in the credit growth of the banking system as almost entire capex was financed by strong cash flows from operations in this period, thus limiting the need for bank credit". The report also added that the capital expenditure by the top 250 listed private companies increased significantly from ₹4,83,300 crore in FY21 to ₹8,42,600 crore in FY24. It is further expected to rise to ₹9,95,100 crore in FY25E. This growth, at a CAGR of 19.8 per cent, was led by key sectors such as oil and gas, power, automobiles, and commodities. The report also noted a strong rise in central government capital expenditure during the same period. Central capex grew from ₹4,26,300 crore in FY21 to ₹10,18,400 crore in FY25E, marking a CAGR of 24.3 per cent. Major contributors to this growth were ministries related to road transport, railways, defence, and capex-related transfers to states. However, state government capital expenditure lagged behind. State capex increased from ₹4,22,300 crore in FY21 but at a slower CAGR of 11.9 per cent over FY21 to FY25E. While it grew by 28 per cent, 11 per cent, and 26 per cent in the next three years, it has declined by 20 per cent year-on-year so far in FY25E to ₹6,07,500 crore (till February 2025). States such as Uttar Pradesh, Maharashtra, Madhya Pradesh, Tamil Nadu, Gujarat, and Odisha were the main contributors to state capex growth. The report further mentioned that the top 250 private companies (excluding BFSI) spent a total of ₹29.6 lakh crore in capex between FY20 and FY24, which was only about 57 per cent of their total cash flow from operations (₹52.7 lakh crore) during the same period. This indicated that companies had enough internal resources and surplus cash to carry out their investment plans without adding to their debt burden. This also explains why there was no significant capex-led credit growth in the banking sector during this time. More Like This Published on May 17, 2025