Govt capex may top budget amid slack private spending

The Centre has fiscal space to raise capital expenditure by ₹20,000-30,000 crore in FY26

- Rhik Kundu & Subhash Narayan

Despite repeated calls from the government, private sector investment on infrastructure has been slow to pick up.

(MINT)

The Centre has the fiscal space to lift infrastructure spending beyond the budgeted ₹11.21 trillion for this financial year if private sector spending remains subdued amid global headwinds, two officials said.

The government has room to raise its 2025-26 capital expenditure (capex) by ₹20,000-30,000 crore, contrasting with FY25’s cutbacks and taking it closer to ₹11.5 trillion, they added.

Even if its spending runs slightly above target, the Centre will stick to its fiscal deficit goal of 4.4% of gross domestic product (GDP) for FY26, supported by buoyant tax collections and a record dividend transfer from the Reserve Bank of India, the officials said, declining to be identified.

Despite repeated government calls, private sector investment has been slow, hurt by US tariff pressure on exports and other external challenges.