Union Budget 2025-26: Charting a new growth path amid capex decline

Challenges

  > Value of new projects announced  declined in the December 2024 quarter, reversing the promising  growth in the September quarter

  > The private sector has pulled back spending on new factories and other long-term assets, while government infrastructure projects, such as new roads, have also slowed 

Takeaways 

> Amid fiscal consolidation measures, capex has been revised downwards to Rs 10.18 trn from Rs 11.11 trn in FY25. It is projected to increase to Rs 11.21 trn in FY26 

> Restrained capex also highlights absorptive capacity of the system