Budget may keep capex steady as govt spots pvt investment revival

GDP.

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Overall capex, including private spending, grew 7.8% in the June quarter 2025-26.

(MINT)

However, the effective capex for the current fiscal year is projected at ₹15.48 trillion, compared to ₹13.18 trillion a year ago, including core capital outlays in the Union budget as well as grants and aid allocated to states for creating capital assets.

With the economy projected to expand by 6.6%-6.8% in 2025-26, according to finance ministry estimates, maintaining capex at around 3.1% of GDP could translate into a modest increase in the absolute outlay for 2026-27, even as the capex-to-GDP ratio remains unchanged.

A finance ministry spokesperson didn’t respond to emailed queries.

“Overall capex, including private spending, grew 7.8% in the June quarter 2025-26. As private sector investment continues to languish, reliance on government capex to drive growth is quite appropriate and should be continued. There is, however, going to be pressure on the fiscal deficit, which was budgeted at 4.4% of GDP in 2025-26,” said D.K. Srivastava, chief policy advisor at consulting firm EY India.