Stay selective in capital goods as sector faces slow growth environment

There was less activity and fewer project awards in roads, railways and water sectors in FY25

One of the disappointing aspects of the Budget was the tightening of allocations to the infrastructure sector.

 

Revised estimates for FY25 have mostly been reduced from the initial budgetary estimates for FY25. Otherwise, the FY26 Budget would have been flat in terms of overall government capex (there was a 10 per cent nominal growth over revised estimates).

 

In the absence of private investment picking up, lower or flat government spending will impact construction adversely with negative knock-on effects for the cement and steel industry, among others. Capital goods is also likely to see an environment of slow growth. There was