Govt capex engines to keep firing in next fiscal

At 3.4% of GDP, government capex may be around ₹12 lakh crore in FY26

- Rhik Kundu & Subhash Narayan

The Centre may maintain its capital expenditure at around 3.4% of the nominal gross domestic product (GDP) in FY26 as it aims to prop up economic growth amid falling state spending, two people aware of the matter said.

At that level, which would be nearly the same as the current fiscal year's target, the capex support may hover around ₹12 lakh crore in FY26 in absolute terms, the people said on the condition of anonymity.

"The Centre is expected to maintain its capex push in the upcoming budget to drive economic growth, as private sector investments are still gradually gaining momentum—though some sectors have seen an uptick—and state-level capex remains sluggish so far," one of the two people cited above said.

For the current fiscal, the Centre's capex plans stand at about ₹11.11 lakh crore, up 11% from FY24's budgeted estimate of ₹10 lakh crore.