CAPEX COMEBACK

Revived public spending and a long-overdue private upswing promise real growth, provided execution keeps up

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A country’s capital expenditure is a key barometer of its economic health.

Excessive reliance on the government for capital expenditure does not create a conducive environment for long-term growth. A sustainable expansion requires balanced investments from both the government and the private sector. Recent official data suggests that private-sector capex is showing a noticeable revival, even as the government continues to shoulder a large share of the overall expenditure. Let us understand how India Inc.’s capex cycle has progressed in the first half of FY26.

MEANINGFUL PRIVATE CAPEX REVIVAL

In the first half of FY26, India’s capital expenditure cycle has become more balanced and resilient than it has been in recent years. The private sector is finally beginning to participate more meaningfully alongside steady government investment. After a long period during which the Centre carried the bulk of capex, data from the first two quarters indicates that private sector companies are increasingly willing to deploy capital. This marks a shift from mere policy-driven spending to structural private-sector investment, which is important for boosting GDP growth.

On the public-sector side, the government's commitment to capital expenditure remains unwavering. Data from the Controller General of Accounts shows that by September ‘25, the Centre had already utilized nearly 52% of its FY26 capex budget - an aggressive pace for just two quarters. In absolute terms, the government spent close to ₹5.8 trillion in the first half of FY26.