Central capex may keep firing in FY26

At 3.4% of GDP, govt capex may be around ₹12 trillion next fiscal

- 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 trillion 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 trillion, up 11% from FY24's budgeted estimate of ₹10 trillion.

The people cited above said the FY26 budget may project capex growth at 7-10%. To be sure, the revised estimate for FY24 stands at ₹9.5 trillion.

The capex plan for 20 major states during FY25 stands at about ₹8.5 trillion, according to the latest budget documents.

A finance ministry spokesperson didn't respond to Mint's emailed queries.