FY27 capital expenditure to rise by about 12%
Apart from traditional ministries, Centre likely to allocate capex to newer sectors also, expects some recovery in private investments.
- Jan 2, 2026,
- Updated Jan 2, 2026 2:20 PM IST
Continuing the momentum on capital spending, the Centre’s capital expenditure could rise by about 10% to 12% in FY27. While railways and roads will continue to get a substantial chunk of the investments, newer segments like urban infrastructure and ports could also get a higher allocation.
Sources underlined that higher capital expenditure has proven to be essential for lifting growth but there is hope that private investments would also pick up due to the boost to consumption through tax cuts and reduction in interest rates.
“Capital expenditure will remain a priority in 2026-27 as well. But apart from traditional sectors that have been the main beneficiaries of allocation of capital expenditure, this time around the government will also be looking at newer sectors that have arisen due to the needs of the economy,” said a source familiar with the development.
In its consultations with administrative ministries, the finance ministry has also tried to assess sectors where capital investments are needed such as urban infrastructure, ports and renewable energy. The railways too continues to require capital investments as it works on its infrastructure modernisation and expansion, the source noted.
Most Budget Estimates for 2026-27 are likely to be finalised after the first advance estimates of GDP are released on January 7, which will give a better indication of economic growth and the performance of different sectors of the economy. The Union Budget is expected to be presented on February 1.
The Centre has allocated Rs 11.21 lakh crore in the current fiscal from, which was a 10.1% increase from the revised estimate of Rs 10.18 lakh crore in FY25. The Budget estimate for FY25 was Rs 11.11 lakh crore but the actual spending was lower as it was an election year.
Expectations are that the allocated capital expenditure will be fully utilised this fiscal. Between April and November 2025, the Centre’s capital expenditure was Rs 6.58 lakh crore or 58.7% of the full year target as against Rs 5.13 lakh crore in the same period last fiscal. In the first eight months of the current fiscal, Railways has already spent Rs 1.81 lakh crore or 72% of the allocated capital expenditure of Rs 2.52 lakh crore while roads and highways had spent 65% of its Budgeted capex of Rs 2.72 lakh crore.
Continuing the momentum on capital spending, the Centre’s capital expenditure could rise by about 10% to 12% in FY27. While railways and roads will continue to get a substantial chunk of the investments, newer segments like urban infrastructure and ports could also get a higher allocation.
Sources underlined that higher capital expenditure has proven to be essential for lifting growth but there is hope that private investments would also pick up due to the boost to consumption through tax cuts and reduction in interest rates.
“Capital expenditure will remain a priority in 2026-27 as well. But apart from traditional sectors that have been the main beneficiaries of allocation of capital expenditure, this time around the government will also be looking at newer sectors that have arisen due to the needs of the economy,” said a source familiar with the development.
In its consultations with administrative ministries, the finance ministry has also tried to assess sectors where capital investments are needed such as urban infrastructure, ports and renewable energy. The railways too continues to require capital investments as it works on its infrastructure modernisation and expansion, the source noted.
Most Budget Estimates for 2026-27 are likely to be finalised after the first advance estimates of GDP are released on January 7, which will give a better indication of economic growth and the performance of different sectors of the economy. The Union Budget is expected to be presented on February 1.
The Centre has allocated Rs 11.21 lakh crore in the current fiscal from, which was a 10.1% increase from the revised estimate of Rs 10.18 lakh crore in FY25. The Budget estimate for FY25 was Rs 11.11 lakh crore but the actual spending was lower as it was an election year.
Expectations are that the allocated capital expenditure will be fully utilised this fiscal. Between April and November 2025, the Centre’s capital expenditure was Rs 6.58 lakh crore or 58.7% of the full year target as against Rs 5.13 lakh crore in the same period last fiscal. In the first eight months of the current fiscal, Railways has already spent Rs 1.81 lakh crore or 72% of the allocated capital expenditure of Rs 2.52 lakh crore while roads and highways had spent 65% of its Budgeted capex of Rs 2.72 lakh crore.