Finance Minister Nirmala Sitharaman on Sunday reinforced the government’s infrastructure-led growth strategy, proposing capital expenditure of Rs 12.2 lakh crore for FY2026-27, up from Rs 11.2 lakh crore previously.
Presenting the Union Budget, Sitharaman highlighted the sharp rise in public investment over the past decade, noting that capital expenditure has expanded nearly six-fold — from Rs 2 lakh crore in 2014-15 to Rs 11.2 lakh crore in the Budget for FY26.
The finance minister said the government would continue prioritising infrastructure development in cities with populations exceeding five lakh, including tier-2 and tier-3 cities that have emerged as key growth centres.
The Budget outlined a series of infrastructure initiatives spanning transport, logistics and urban connectivity. Sitharaman announced plans to operationalise 20 new National Waterways over the next five years, alongside the setting up of regional institutes of excellence for waterways training.
To strengthen inland water transport, the government will develop a ship repair ecosystem in Varanasi and Patna and launch a coastal cargo scheme aimed at increasing the share of coastal shipping and inland waterways in freight movement.
The Budget also proposed the creation of an Infrastructure Risk Guarantee Fund and the setting up of dedicated REITs to recycle assets of central public sector enterprises (CPSEs), in a move aimed at crowding in private investment.
In rail infrastructure, the government plans to develop seven high-speed rail corridors as “growth connectors,” including routes such as Mumbai–Pune, Hyderabad–Pune, Hyderabad–Bengaluru, Chennai–Bengaluru, Delhi–Varanasi and Varanasi–Siliguri.
The sustained capex push is intended to strengthen urban infrastructure, support employment generation and catalyse private sector investment, even as the government remains committed to fiscal consolidation. India’s fiscal deficit for the year is projected at 4.4% of GDP.
India’s economy is estimated to grow 7.4% in the current financial year, with inflation expected to remain near 2%. Economists continue to view capital expenditure—particularly in roads, railways, housing and logistics—as a key policy lever due to its high multiplier effect.
Rating agency Crisil said the Rs 12.2 lakh crore capex outlay represents an 8.9% increase over the current fiscal and is broadly in line with expectations, though it underscored the need for faster private sector investment and greater asset monetisation over the medium term.
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