The Union Budget for FY26 has set capital expenditure (capex) at Rs. 11,21,000 crore (US$ 128.60 billion), reflecting a 10% increase over the revised estimate of Rs. 10,18,000 crore (US$ 116.78 billion) for FY25. However, the government is expected to fall short of its budgeted capex target for FY25 by Rs. 93,000 crore (US$ 10.67 billion), with the revised estimate at Rs. 11,11,000 crore (US$ 127.45 billion). Compared to this, the capex allocation for FY26 has risen by less than 1%. Union Minister for Finance and Corporate Affairs, Ms. Nirmala Sitharaman, reaffirmed the government’s commitment to capex, stating that public spending remains a priority. She also announced a Rs. 1,50,000 crore (US$ 17.21 billion) outlay for 50-year interest-free state loans aimed at capex and reform incentives.
Elections and the model code of conduct impacted capex growth in the H1 FY25. However, data from the Controller General of Accounts (CGA) shows a 95% rise in capex in December 2024 compared to December 2023. From April to December 2024, 62% of the budgeted capex was used, down from 67% in FY24. JSW Group Chairman and Managing Director Mr. Sajjan Jindal noted that while the Rs. 11,20,000 crore (US$ 128.48 billion) capex is lower than the Rs. 13,00,000 crore (US$ 149.13 billion) anticipated, it remains at a strong level, supporting core sectors. The government had increased capex by 37.5% to Rs. 10,00,000 crore (US$ 114.72 billion) in FY24, aiming to boost infrastructure, create multiplier effects, and encourage private sector investment, particularly in the post-Covid recovery phase.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
