GROWTH PLAN: CAPEX, JOBS, SOCIAL SPEND

India’s growth is strong in FY27. Public capex is rising and private investment is picking up. Consumer demand is recovering. Fiscal discipline remains important. Social spending must scale up

- DEBOPAM CHAUDHURI

DOMESTIC and international observers acknowledge India’s medium-term economic prospects. FY27 is shaping up to be one of the strongest years for economic activity since FY19, at least according to high-frequency data. Policy actions during FY26 have driven this momentum and laid a foundation for growth.

An illustration is public capital expenditure. After a slowdown in FY25, government capex rebounded in FY26. Year-to-date, capital expenditure is 25 percent higher than the period last year, while revenue expenditure has grown by less than 2 percent. This divergence highlights the government’s preference for investment-led growth, prioritising projects with financial returns, such as urban mobility, highways, airports, shipyards, and port infrastructure. The expansion of operational metro rail networks, the pace of highway construction, capacity additions at airports, and improvements in turnaround times at major seaports are documented.

In contrast, revenue expenditure—comprising subsidies and welfare spending—has been restrained. While such spending delivers societal returns, these benefits materialise over a longer horizon. For now, the government prioritises the creation of return-generating assets to revive economic momentum, even if early gains accrue unevenly across sections of the population.