The government is expected to surpass its revised capital spending (capex) target of ₹10.18 lakh crore during the financial year 2024–25 (FY25), as per a report prepared by NDTV Profit and published on Sunday.
A top government official in the report said, "The data so far suggests that we are most probably going to surpass the revised target by a very wide margin in absolute terms."
In the 2025–26 Union Budget, the initial FY25 capex target of ₹11.1 lakh crore was reduced to ₹10.18 lakh crore. For the next fiscal year (FY26), the government has allocated ₹11.21 lakh crore for capital expenditure.
Finance Minister Nirmala Sitharaman highlighted that India is likely to remain the world's fastest-growing major economy, led by growing public spending and rising consumption in rural areas. Referring to the fiscal policy in her Budget announcement, Sitharaman pointed out that the effective capital outlay for FY26 is 4.3% of the nation's GDP, whereas the fiscal deficit is at 4.4%.
This reflects that the government is employing the whole borrowed funds to finance efficient capital expenditure, developing capital assets," she elaborated.
India's GDP is expected to expand by 6.5% in FY26, driven by strong government expenditure on major infrastructure and renewed private sector investment, as per EY's latest Economy Watch report.
In addition, Jefferies recently highlighted a sharp pick-up in capex in India, which trend is anticipated to continue in the near term. Various sectors are witnessing major flows of investments, further supporting the momentum.
The government focus on transport infrastructure, especially on the railways and roads, has yielded impressive progress, with 83–87% of FY25 revised outlays for the sectors already being accomplished.
In further support of its infrastructure focus, the Centre has substantially increased fiscal transfers to states—logging a near 60% surge. This government support is seen to drive state-level infrastructure activity, helping further economic growth.
In a study by CareEdge Ratings, capital expenditure by the top 15 Indian states is projected to increase 18% year-on-year to ₹7.2 lakh crore in FY26. This pick-up is driven by post-election increased spending splurges, ramping up of infrastructure implementation, and sustaining the ₹1.50 lakh crore interest-free capex loan facility provided to states under the Union Budget 2025–26.
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