India Inc expects consumption boost, plans to push capex

A majority of Indian chief executive officers (CEOs) plan to step up investments in capacity expansion, anticipating a surge in urban consumption following budgetary incentives, according to a dip-stick survey conducted after the 2025-26 Union Budget announcements on Saturday.

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Of the 12 respondents, 91.67 per cent said the personal tax exemptions announced in the Budget would drive up consumption, where a slowdown was a key concern for top business leaders. Additionally, 75 per cent of CEOs believed the measures in the Budget would bolster business sentiment and confidence, prompting greater investment, even as they had anticipated a higher allocation for capital expenditure (capex).

"Public capex is the frontrunner to private capex. While capex has been maintained, we were expecting a higher allocation to catapult growth," said the CEO of a large company, requesting anonymity.

The government introduced significant changes to personal income tax rates, including zero tax for individuals earning up to 12 lakh, offering relief to taxpayers. The resulting increase in disposable income is expected to lift sales of small cars, two-wheelers, and affordable homes.