India's private sector shows improved investment readiness

India's private sector is in a stronger position for investments than it was a decade ago, according to a report by Crisil Intelligence. Companies have improved their financial health and reduced debt levels. This turnaround is largely thanks to low capital spending and government initiatives aimed at boosting infrastructure. The financial condition of private firms has improved significantly. Their debt-to-net-worth ratio has dropped from 1.05 times in 2015 to an estimated 0.50 times in 2025. This gives companies more room to expand and take on new debt. Many firms have used profits to pay off existing debt, strengthening their balance sheets further. Banks have also seen better financial health. The gross non-performing assets, or bad loans, in banks fell from 11.2 percent in March 2018 to a projected 2.5 percent in March 2025. This improvement has made it easier for banks to provide credit to businesses. Recapitalization efforts totaling over Rs 3.3 lakh crore from 2017 to 2021 have bolstered public sector banks. Government policies have played an important role in promoting private sector investment. Initiatives like the Production-Linked Incentive scheme, Make in India, and tax reductions have helped create a better investment climate. However, despite these positive developments, there are global uncertainties that may affect corporate investments. Private consumption, which slowed to 5.6 percent growth in 2024, is expected to recover to 7.6 percent in 2025, driven by improved rural incomes and lower inflation. Still, urban demand faces challenges from higher interest rates and tighter lending conditions. The ongoing geopolitical situation and U.S. tariff actions create uncertainty that could delay major investment decisions by private companies. The Indian government is taking measures to stimulate domestic demand, which may gradually increase corporate investments. However, caution will remain as businesses navigate this complex environment.