The government is likely to recalibrate its capital expenditure strategy by expanding its focus beyond traditional infrastructure sectors such as roads and railways to sustain growth momentum.
Government sources said the finance ministry is expected to begin consultations with key infrastructure-related ministries — particularly urban development, shipping, ports, and civil aviation — to explore options for increasing capital spending in these areas.
This move is likely part of a broader review aimed at optimising the ₹11.21 lakh crore capital expenditure budget for FY26. While roads and railways continue to account for nearly 47% of this fiscal year’s allocation, policymakers believe a fresh push to other sectors may be needed to ensure faster and broader public investments.
Some officials believe capital investments in roads and railways may be approaching saturation or may now require longer gestation periods for returns, given the sustained annual growth in these sectors since the COVID period.
As a result, urban infrastructure, ports, shipping, and civil aviation are expected to become the next areas for enhanced capital spending, with changes in sectoral allocations.
Simultaneously, the government is likely to assess why private capital expenditure has remained flat. Official data shows the private sector’s share of capital formation plateaued at around 33% of GDP in FY24, down from 37% in FY20, while the combined share of the government and public sector undertakings rose to 25% during the same period.
While global geopolitical tensions and supply chain issues may be partly responsible, the government wants to determine whether there are any “policy imperatives” needed to encourage private capital.
The broader message is that the government plans to maintain capital expenditure as a key growth driver while gradually expanding into sectors that can deliver long-term economic gains.