Next budget may keep govt capex plan steady

Infra spending level may be maintained as private capex pickup expected

- Rhik Kundu & Subhash Narayan

The Centre is likely to maintain its infrastructure spending at the same level in 2026-27 as in the current fiscal year, as it anticipates a pickup in private capital expenditure, two people familiar with the matter told Mint.

The 2026-27 capex target likely at 3.1-3.2% of gross domestic product (GDP) will nudge the country toward a more measured phase of fiscal consolidation, signalling the government's intent to balance economic momentum with its fiscal deficit goal amid rising global uncertainties.

The central government may not raise the current capex ceiling substantially, although there will be adequate fiscal headroom next year to continue funding large-scale infrastructure and industrial projects already in the pipeline, said the first person, on condition of anonymity.

“The focus is also on execution efficiency and ensuring that the existing projects yield tangible returns to the economy,” the person said.

“Efforts will also focus on streamlining approvals, reducing project delays, and strengthening coordination between the Centre and states to maximize the overall economic impact,” the person added.

Private push

Public investment has been the principal driver of growth for the past few years.

This has offset tepid private investment and uneven export demand.

However, with improving corporate balance sheets and capacity utilization, the Centre is counting on private capex to gradually pick up.

“The idea is to sustain momentum without stretching public finances too thin,” said the second person, on condition of anonymity.

“Over the next few years, the emphasis is expected to move from sheer scale to strategic depth, ensuring that capital spending creates productive assets, attracts private participation, and strengthens the economy’s long-term capacity, rather than just boosting near-term growth numbers,” the person added.