The domestic economy has entered the new year on a firm footing, displaying resilience and renewed momentum, especially in investment intentions by corporates, amid a turbulent global backdrop, according to the ‘State of the economy’ article in the Reserve Bank of India’s monthly bulletin. The total flow of financial resources to the commercial sector, meanwhile, rose by 35.29%, supported by credit from both bank and non-bank sources in FY26, according to the article.
Investment intentions by the private corporate sector rose to Rs 4.35 lakh crore during FY26, out of which banks and financial institutions sanctioned Rs 3.45 lakh crore. External commercial borrowings and IPOs — for capital expenditure purposes — accounted for another Rs 85,800 crore, as per the data provided in the article authored by a panel of researchers. It was below Rs 4 lakh crore in the previous year. Views expressed in the article do not reflect those of the central bank, it stated.
Corporate capex push
Although the total cost of capex projects sanctioned by select banks and financial institutions (FIs) during the third quarter (Q3) was lower than the previous quarter, the sanctioned amount in Q3 was above the average for the post-Covid period, underscoring the persistence of investment appetite, it said. “Majority of the intended investment is concentrated in the power, chemical and construction industries,” the RBI report said.
On the investment front, total funds raised for capex purposes through different channels during April-December FY26 remained higher than in the comparable period since FY20, indicating sustained investment optimism, the RBI report said. A persistent drag on the country’s growth trajectory in recent years has been the muted pace of corporate investment, which has tempered the broader expansion momentum despite otherwise supportive macroeconomic conditions.
Moreover, during up to January 31, 2026, total flow of financial resources to the commercial sector in FY26 so far increased by nearly 35.29% to Rs 34.5 lakh crore from Rs 25.5 lakh crore a year ago. Non-bank sources — corporate bond issuances and FDI to India — showed a marked increase so far in FY26. As on January 31, 2026 the total outstanding credit to the commercial sector rose by 14.7%, with non-bank sources registering a growth of 15.1%, the RBI report said.
The flow of resources to the commercial sector refers to the total financial funds mobilised and made available to businesses — both public and private non-financial entities — to support their operations, investment, expansion, and working capital needs.
Corporate earnings
Meanwhile, quarterly results of listed private companies point to strengthening aggregate sales growth, while industrial activity remains robust and the services sector continues to expand at a healthy clip, according to the article.
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It said manufacturing companies recorded double-digit sales growth, supported by stronger performances in the automobile, electrical machinery, food products and non-ferrous metal industries despite contraction in the petroleum industry. “Sales growth of IT companies improved, while that of non-IT services remained broadly stable during the quarter.”
The RBI article’s assessment of the corporate performance shows that operating profit of manufacturing companies rose during Q3FY26 on a year-on-year basis due to moderation in growth of other expenses. However, operating profit margin moderated on a sequential basis. Within the services sector, operating profit growth improved for IT companies, while it moderated for non-IT services companies. Nonetheless, the operating profit margin expanded sequentially for both IT and non-IT companies, according to the article.
The Union Budget 2026–27 has struck a careful balance between fiscal prudence and growth imperatives, reaffirming the path of consolidation without compromising on capital expenditure and long-term development priorities, the RBI report said. Inflation, as reflected in the first print under the revised CPI series, remains benign, affording policy space and reinforcing macroeconomic stability.
Impact of trade deals
The revival of foreign portfolio inflows, supported by the India-EU free trade agreement and the interim India-US trade deal, alongside a rebound in the rupee, signals improving investor confidence in India’s growth prospects, the report said. FPI inflows were at Rs 31,742 crore in secondary and IPO markets in the month of February as against outflows of Rs 1.04 lakh crore in calendar year 2025, according to NSDL data.
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“The completion of the India-EU free trade negotiations in end-January and the subsequent interim trade agreement between India and US are likely to play a significant role in the coming years by improving market access, enhancing export competitiveness, and integrating Indian firms more deeply into global value chains,” the RBI report said. In the immediate term, it has led to a change in investor sentiments.
Globally, economic activity has held up better than anticipated despite heightened geopolitical undercurrents and episodic financial market volatility. While overall uncertainty has eased from its September 2025 peak, fresh geopolitical tensions in early 2026 injected caution into markets, tempering business optimism across major economies, the article said.
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