Public capex takes centre stage as Budget 2026 sharpens growth push
Higher outlays for roads, railways, and energy underscore 2026-27 investment strategy
 "Public capex takes centre stage as Budget 2026 sharpens growth push")
Taking a cue from the public investment-led growth model of recent years, the Union Budget for 2026-27 (FY27) has sought to push the government’s capital expenditure (capex) further, with a sharp focus on infrastructure asset creation.
The Budget pegs effective capex for FY27 at ₹12.21 trillion, accounting for about 22 per cent of the overall ₹53.47 trillion expenditure this year. This marks an 11.5 per cent increase over the Revised Estimate (RE) of ₹10.95 trillion for 2025-26 (FY26).
“Public capex has increased manifold from ₹2 trillion in 2014-15 to an allocation of ₹11.2 trillion in Budget Estimate 2025-26. In FY27, I propose to increase it to ₹12.2 trillion to continue the momentum,” Finance Minister Nirmala Sitharaman said in her Budget speech in Parliament.
Data in the Budget documents show government capex has risen steadily from ₹7.4 trillion in 2022-23 to ₹9.5 trillion in 2023-24, ₹10.5 trillion in 2024-25 and ₹11 trillion in RE for FY26.
Roads, highways, and railways together accounted for more than ₹6 trillion of public investment, underlining the government’s intent to spur growth through large infrastructure projects.
The railways have been allocated ₹2.92 trillion under revenue expenditure for FY27, up from ₹2.65 trillion in the FY26 RE, a rise of 10 per cent. The road transport and highways sector received an outlay of ₹3.09 trillion, a 7.6 per cent increase over the RE of ₹2.87 trillion for FY26.
Sitharaman highlighted “delivering a powerful push to infrastructure” as one of the key pillars under the government’s “kartavya”, or duty, to accelerate and sustain economic growth.
The focus spans several initiatives planned for FY27, including a scheme to promote domestic manufacturing of high-value construction and infrastructure equipment and infrastructure upgrades in 200 legacy industrial clusters.
“During the past decade, our government has undertaken several initiatives for large-scale enhancement of public infrastructure, including new financing instruments such as infrastructure investment trusts and real estate investment trusts, and institutions likethe National Investment and Infrastructure Fund and the National Bank for Financing Infrastructure and Development,” she said.
The government will also continue prioritising infrastructure development in Tier-II and Tier-III cities with populations exceeding 500,000, which have emerged as key growth centres.
The emphasis on public investment was reflected in big-ticket announcements in nuclear power, battery energy storage, and carbon capture, utilisation and storage (CCUS).
The Budget extended the basic Customs duty exemption on imports required for nuclear power projects until 2035 and expanded it to cover all nuclear plants regardless of capacity. It also proposed an outlay of ₹20,000 crore over five years to deploy CCUS technologies across five sectors — power, steel, cement, refinery, and chemical.
Solar power development received an allocation of ₹30,539 crore for FY27, a 32 per cent increase over the ₹23,124 crore provided in the FY26 RE.
Sitharaman also announced dedicated rare-earth mineral corridors in four coastal states and a basic customs duty exemption on capital goods used for critical mineral processing, as India moves to secure strategic mineral supply chains.
She said the scheme for manufacturing rare earth permanent magnets (REPMs), launched in November 2025, will be supported by corridors in Odisha, Andhra Pradesh, Kerala, and Tamil Nadu, focusing on mining, processing, and manufacturing.
“Once we identify, explore, and process these minerals domestically, our dependency on external sources for rare earths will reduce,” Sitharaman said at a post-Budget press conference.
The move builds on a ₹7,280 crore scheme approved by the Union Cabinet last November to promote domestic manufacturing of sintered REPMs used in electric vehicle motors, wind turbine generators, electronics, and defence applications.
Key figures
- ₹10.95 trillion: Government's capital expenditure for 2025-26 (RE)
- ₹12.21 trillion: Government's capital expenditure for 2026-27 (BE)
- ₹2.92 trillion: Indian Railways' budgeted outlay for 2026-27, up 10% over RE2025-26
- ₹3.09 trillion: Budgeted outlay for Road Transport & Highways for 2026-27, up 7.6% over RE 2025-26
- ₹20,000 crore: Proposed investment in CCUS technologies
- ₹30,539 crore: Allocation for solar power sector, up 32% over RE of 2025-26