Capital Formation Index.
The velocity and volume of new productive capital entering India's markets: public and private, in one number.
The headline index
100 = mid-2024 formation pace (trailing 3-month average). A reading above 100 means India's capital-formation engine is running hotter than the mid-2024 baseline: today, 53% hotter.
The five pillars
Each pillar is a channel through which fresh capital forms. Latest reads are anchored to official 2025 aggregates.
Primary equity raised: IPOs, FPOs, QIPs, rights issues, and private equity / venture rounds.
Source ↗ Prime Database / Business Standard, Sept 2026Primary debt raised: corporate bond issuance (private credit is now its own pillar).
Source ↗ Business Standard / bond desks, Jul 2026Direct lending and special-situations capital from AIFs and credit funds: the fastest-growing formation channel.
Source ↗ EY India Private Credit, 2025 / Moody's, Jul 2026Incremental non-food bank credit: fresh lending into the commercial economy.
Source ↗ RBI / Business Standard, Sept 2026Newly incorporated companies and LLPs: the birth rate of capital-seeking firms.
Source ↗ Ministry of Corporate Affairs (MCA), 2025Gross foreign direct investment inflow: external capital choosing to form here.
Source ↗ RBI Bulletin, Jul 2026Smoothed, rebased, weighted into one number.
How it's built
Equity, debt, bank-credit, new-entity, and cross-border flows: the five channels through which fresh capital actually forms. Secondary trading and mark-to-market gains are excluded by design.
Each pillar is a monthly flow. We take a trailing 3-month moving average to strip single-deal lumpiness, then rebase to 100 at the mid-2024 base window so units (₹, $, counts) become comparable.
Equity 25% · Debt 25% · Cross-border 20% · Bank credit 15% · New-entity 15%. Weights start judgement-based; they migrate to PCA-derived loadings as the back-history deepens.
A level index (how much capital is forming) and a diffusion read (how broad: the share of pillars rising month-on-month). Breadth catches turns the level can mask.
Formation precedes activity. The CFI is validated against forward GDP, capex, and job growth: the design target is a 2–4 quarter lead. The lead-correlation is published, not assumed.
- · Double-counting: a fund that raises then deploys is counted once, at the point of formation, never twice.
- · Valuation inflation: flows are real-rupee; the index tracks capital formed, not price appreciation.
- · Private-data lag: VC/PE and FDI figures revise for several quarters; vintages are stamped and revision bands shown.
- · Mega-deal noise: the 3-month average plus a trimmed-mean cross-check stop one jumbo issue from defining a month.
Data vintage August 2026. Headline reads anchor to official 2025 aggregates from SEBI/Prime Database, ICRA & IEEFA, the RBI, DPIIT, and the Ministry of Corporate Affairs (cited per pillar above). The within-year monthly distribution is Gravitywell's reconstruction from official annual and quarterly releases; pillar totals reconcile to the cited primary sources. Private-market and FDI components are subject to revision.
Methodology v3.2 (2026-07). Built to the OECD/JRC composite-indicator handbook: distance-to-reference normalisation, 3-month smoothing, weighted aggregation, plus a drop-one-pillar uncertainty band and a data-coverage ratio (shown above). Series are point-in-time; published values are not silently restated.
The number, every month.
The Capital Formation Index updates monthly, with the full pillar breakdown and revision notes: straight to your inbox.