Centre eyes ₹12 trillion capex in FY27 as private investment stays cautious

₹12 trillion in FY27, according to two people aware of the matter. The move signals that public investment will continue to play a central role in supporting growth as private capex remains uneven and global uncertainty persists.The proposal reflects the government's continued reliance on infrastructure spending to support domestic demand amid geopolitical risks, trade uncertainty and volatile financial conditions that have kept private investors cautious.The planned increase assumes the government will close the current financial year without fiscal slippage despite sharp cuts in goods and services tax (GST) and income tax rates, aided by savings on the revenue account and improved fund utilization by implementing agencies, one of the people cited above said.In FY26, the Centre allocated ₹11.21 trillion for capital expenditure, marking a 10% jump over the previous year’s revised estimates, along with an additional ₹3.9 trillion as grants to states for their own capital spending.

Total capex spending as of November 2025 stood at about ₹6.6 trillion or 59% of the budget allocation.More than 85% of the Centre’s effective capital expenditure is concentrated in four areas—road transport and highways, railways, defence, and transfers to states for infrastructure projects.Policymakers believe these segments, which have shown strong utilization in recent years, merit continued support to accelerate asset creation.'As of the third week of December, Railways had spent nearly ₹2 trillion, or close to 80% of its over ₹2.5 trillion capex allocation for the current year. The road transport ministry had spent about ₹2 trillion, or roughly 79% of its allocation, official data showed.Both sectors are expected to exhaust their capex well