Finance Minister Nirmala Sitharaman (left) with Finance Minister Pankaj Chaudhary. (PTI)
NEW DELHI – Finance Minister Nirmala Sitharaman not only chose to maintain the Centre’s focus on capital expenditure, but also announced that at 4.4% of GDP it reached the highest level in at least a decade.
In her ninth consecutive Budget speech, she proposed a record public capital expenditure of Rs 12.2 lakh crore for 2026-27, about 15% higher than the revised estimate for the current financial year. Among the ministries, the highest amount of over Rs 2.9 lakh crore has been allocated for road transport and highways, followed by railways (about Rs 2.8 lakh crore) and defense (over Rs 2.2 lakh crore).
“The general capital expenditure has increased from Rs 2 lakh crore in FY 2014-15 to an allocation of Rs 11.2 lakh crore in BE 2025-26.
“In FY 2026-27, I propose to increase it to Rs 12.2 lakh crore to continue the momentum,” she said. In her interaction with reporters after the Budget, the Foreign Minister said that this represents 4.4% of the GDP which is “the highest at least in the last 10 years, and may be the highest if you take the data of the previous period.”
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According to the budget document, for the second year in a row, the capital expenditure target was not met. In 2024-25, the actual capex was Rs 10.5 lakh crore as against BE of Rs 11.1 lakh crore, and during the current financial year, the capex was revised down to Rs 10.9 lakh crore as against BE of Rs 11.2 lakh crore.
In addition to direct capital expenditures, the Center also works with states to support some of their public investments as this is critical to generate demand for other sectors, enhance overall economic activity and create employment opportunities.In her speech, Sitharaman also announced the establishment of an Infrastructure Risk Guarantee Fund to provide carefully calculated partial credit guarantees to lenders, to enhance the confidence of private sector developers regarding risks during the infrastructure development and construction phase.
