Economic Survey: Can profits continue to be India Inc's primary source of funds?

Subscribe to enjoy similar stories. The Economic Survey for FY25-26, tabled in Parliament on Thursday, said India’s commercial sector is increasingly tapping alternative financing to offset a moderation in bank credit. Faster monetary policy transmission has made market-based instruments a viable alternative for large corporations, it said, adding that rising profitability has allowed firms to leverage internal resources for expansion, collectively reducing their traditional reliance on bank lending.

Over April-November 2025, within the overall flow of financial resources, there was a significant increase in the flow from non-bank sources, which rose by 29.3% year-on-year, against 18.3% growth in non-food bank credit. “A concurrent increase in the flow of financial resources to the commercial sector, bolstered by greater non-bank intermediation, has accompanied the slowdown in bank credit growth in early FY26. This trend indicates that non-bank sources have effectively offset the decline in bank credit," the survey noted.

Within non-bank funding, growth from foreign sources outpaced domestic growth. As of 31 December 2025, foreign sources surged by 38% y-o-y, doubling the 19.1% growth from domestic sources. This foreign influx was primarily driven by a dramatic rise in external commercial borrowings (ECBs)—which climbed from ₹5,000 crore to ₹27,700 crore—and a 67% jump in foreign direct investment (FDI).

Meanwhile, domestic growth was fueled by corporate bond issuances, which saw a staggering 263.3% increase on a yearly basis, the survey added. A separate Mint analysis of CMIE data revealed that net profits—or internal accruals—remain the primary funding source for Indian corporates. In the September quarter,