Capex allocation may not rise much

NEW DELHI: Mansukh Mandaviya, Minister of Labour and Employment, recently said India must increase allocation for infrastructure spending to Rs 15 lakh crore from the present Rs 11.11 lakh crore.

However, given the fiscal constraints and the likely inability of the government to fully spend the Rs 11.11 lakh crore allocation for capital expenditure (capex) in the current financial year, it is unlikely that the government may hike capex allocation much in the coming budget. Most analysts expect capex allocation to rise by 10-12% over actual capex in FY25.

Analysts have projected the capex allocation for FY26 in the budget to be at the same level as was budgeted for the current financial year – Rs 11.11 lakh crore. Some of them have even lowered the capx allocation to below current year’s budget target — the reason being sharp fall in Capex spending in FY25 by the central government.

Rating agency ICRA expects the capex allocation for FY26 to be Rs 11 lakh crore, Nomura pegs the capex allocation at Rs 10.7 lakh crore. Morgan Stanley estimates capex allocation in the budget to be Rs 11.2 lakh crore. Aditi Nayar, chief economist, ICRA Ratings says: “…a likely dip in revenue deficit would allow for a capex target of Rs 11 lakh crore for FY26, similar to budget estimate for FY25, albeit 12-13% higher than expected outgo in FY25 (Rs 9.7 lakh crore).”