"Crisil Research's analysis of capital investments across 22 large sectors shows that the slide in investments continues and we expect a 2 per cent decline in the current fiscal.
"What's more worrying is that private investments - on skid row since the last couple of years - are expected to decline another nearly 8 per cent this fiscal," it said in a report.
The research firm said the utilisation rates in 10 out of 12 large industrial sectors are wallowing at 5-year lows which is causing new project announcements to dry up.
"As a result, we believe that a meaningful recovery in capital investments will only be visible from fiscal 2017 - -when we expect to see a 7 per cent increase," it said further.
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However, it added that infrastructure is to benefit from the government push.
"In case of infrastructure, the scenario is quite the reverse - with power generation being the only segment expected to see a decline in investments."
Thermal power capacity additions are expected to decline from 40,000 mw in the last two years to 36,000 mw in the next two, it said.
For national highways, the pace of execution has picked up significantly following a slew of policy changes that ease rules regarding environmental clearances.
Similarly, renewable energy (wind and solar) benefits from the fiscal incentives and favourable policies that are expected to result in a doubling of capacity additions in the next two years from about 6,000 mw to 11,000 mw.
"While the government is putting all its muscle to improve infra creation in the country, private participation remains lacklustre; the poor financial health of infra developers and construction companies is the limiting factor," it said.