Budget 2025: Centre sets capex goal for FY26 at Rs 11.21 trillion

Falling short of the budgeted capital expenditure (capex) in the current financial year (FY25), the Union Budget FY26 has pegged capex at Rs 11.21 trillion — a growth of around 10 per cent over previous year’s revised estimates (RE) of Rs 10.18 trillion.

 

The government had set a Budget Estimate (BE) for capex at Rs 11.11 trillion for FY25, against which it is expected to miss the target by Rs 93,000 crore. Compared to BE of FY25, the capex allocation for FY26 has seen an increase of less than 1 per cent.

 

“There is no reduction in public spending on capital expenditure. We continue to place emphasis on capex, which has sustained us,” Finance Minister Nirmala Sitharaman said during the post-Budget briefing.

 

In her Budget speech, Sitharaman also announced an outlay of Rs 1.5 trillion for the 50-year interest-free loans to states for capex and incentives for reforms.

 

The pace of capex in the first half of the current financial year (H1FY25) had suffered on account of elections and the model code of conduct. The latest data by the Controller General of Accounts (CGA), however, showed an increase of 95 per cent in capital expenditure in the month of December 2024 compared to December 2023.

 

For April-December period of FY25, the CGA data showed that the government has utilised 62 per cent of the BE against 67 per cent in the corresponding period of FY24.

 

“The government has maintained its thrust on capex though the spend of Rs 11.2 trillion is lower than a spending of around Rs 13 trillion that I was hoping for, based on the past trend. But still, capex spend is at a robust level and will give a boost to the core sectors,” said Sajjan Jindal, chairman and managing director (CMD), JSW Group.

 

The government had hiked capex by 37.5 per cent to Rs 10 trillion for FY24. The stress on capex, especially post-Covid, has been not just to build infrastructure and multiplier effects on the economy but also to crowd in private sector investments.