Nirmala Sitharaman Proposes to Increase Public CAPEX to ₹12.2 Lakh Crore for FY27 

New Delhi, February 1, 2026: Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2026-27, has proposed a significant rise in the government’s capital expenditure. This is for the next financial year. 

The government has fixed the public capital expenditure at ₹12.2 lakh crores in FY27. This has been done against the revised estimate of ₹11.2 lakh crores in FY26, and this is a continuation of the government’s focus on infrastructure-driven economic growth and building capacities in the long term. 

Record Allocation for Development of Infrastructure 

Infrastructure remains a top focus, as seen by the Union Budget 2026-27’s record capital spending of ₹12.2 lakh crore, and this investment includes road, rail, port, power, urban infrastructure, and logistics. 

The enhanced spending intends to improve connectivity, reduce transportation costs, promote industrial production, and create jobs, thereby promoting long-term growth, particularly in the construction and related sectors. 

Market Response and Economic Importance 

The stock markets reacted positively to the higher CAPEX announcement, and on budget day, key indices such as the Nifty 50 and the BSE Sensex surged in early trade. 

It is also worth noting that government capital expenditure is crucial during a period when private investment in certain capital-intensive sectors is hesitant. Sustained public spending is viewed as a means of attracting private investment in the medium term by enhancing demand visibility and reducing execution risks. 

Consistency in Capital Spending Strategy 

The increase in FY26-27 is a continuation of a multi-year trend of increasing capital expenditure. The public CAPEX has been increasing steadily over the last decade. It has increased from nearly ₹2 lakh crore in the early 2010s to over ₹11 lakh crore in FY26. 

It is a clear indication that there is consistency in the strategy and a long-term approach to developing the economic infrastructure of India. The plan is still geared towards the development of hard infrastructure and not consumption spending. 

Fiscal Framework and Outlook 

The allocation of CAPEX is part of the fiscal framework that seeks to achieve a balance between growth and fiscal discipline. The budget outlines measures to manage the fiscal deficit, in addition to investments in strategic sectors. 

The proposal to enhance the government’s CAPEX to ₹12.2 lakh crore in FY27 reiterates the government’s policy to pursue infrastructure development as the engine for economic growth and stability. 

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