The Reserve Bank of India (RBI) has revised its forecast for private-sector capital expenditure to ₹3.2 trillion in FY27, marking a rise from ₹2.6 trillion in FY26. Simultaneously, the value of newly announced projects has more than doubled, from ₹56 trillion in FY21-FY23 to ₹104 trillion in FY24-FY26, reflecting a surge in private investment initiatives.
The number of distressed projects has fallen, with their share of total outstanding projects declining from a peak of 4 per cent in FY14 to less than 0.1 per cent in FY26. In value terms, distressed projects fell from a peak of ₹3.3 trillion in FY14 to ₹14,000 crore by the end of FY26.
The National Institute of Public Finance and Policy (NIPFP) analysis showed that new private-sector project announcements rose from ₹4 trillion in FY14 to ₹35 trillion in FY26. The aggregate cost of projects reached a record ₹4.4 trillion in FY26, up from ₹3.7 trillion in FY25.
NIPFP categorizes distressed projects as either ‘shelved’ or ‘abandoned’. Shelved projects are paused before starting and may resume later, while abandoned projects halt during execution with no revival plans.
Why Are Projects Still Getting Distressed?
The NIPFP analysis showed that the nature of project distress has changed over the past decade. In FY14, governance-related issues such as land acquisition, environmental clearances, and fuel or feedstock supply accounted for 60 per cent of distressed projects. That share had fallen to 20 per cent by FY26.
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At the same time, NIPFP classified 80 per cent of distressed projects in FY26 under “Other issues”, which include funding constraints, market and economic conditions, and operational challenges. Within this category, unfavourable market conditions and lack of promoter interest were the major factors in the past three years, accounting for nearly 72 per cent of distressed projects in FY26.
Where Is Private Investment Moving?
The private investment pipeline is becoming more concentrated in emerging sectors.
Bank credit data shows a financing surge, with infrastructure credit reaching an eight-year high of ₹1.2 trillion, driven largely by the power sector. NIPFP said credit growth in infrastructure was more than 3.3 times its earlier level, while the non-infrastructure sector recorded 1.8 times growth in FY26.
The New Risk for Private Capex
The decline in domestic governance-related constraints does not remove project risks. NIPFP said the current risks are increasingly linked to market conditions. The West Asia conflict was followed by a 56 per cent year-on-year fall in private investment announcements in March 2026. The report also cautioned that rising investment announcements do not necessarily translate into completed projects, unless the project is commissioned and production commences, the risk of projects being shelved or abandoned remains.
