India’s federal government has announced a record increase in infrastructure spending, raising the capital expenditure allocation to ₹12.2 trillion ($133.1 billion) for the fiscal year 2026–27, Finance Minister Nirmala Sitharaman said in the Union Budget presented on February 1, 2026. This marks an 11.4% annual rise over previous allocations as the government continues to prioritise infrastructure as a key engine of economic growth.
The elevated spending reflects India’s strategy to bolster economic activity and create jobs amid global economic uncertainties, building on the substantial infrastructure investments that followed the COVID-19 pandemic. The capex target for the current fiscal year ending March 2026 was slightly revised down to ₹10.95 trillion from an earlier estimate of ₹11.21 trillion, but the next year’s outlay sets a new record.
Analysts say the infrastructure push is expected to benefit both the manufacturing and private sectors, with strong demand for construction and related services. In response to the budget announcement, shares of major capital goods and infrastructure companies such as Larsen & Toubro saw gains.
The broader economic context suggests that India’s economy remains resilient; despite external pressures like U.S. tariffs, growth is projected at around 7.4% this fiscal year, supported by infrastructure spending and recent tax cuts.
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