Budget 2025: Government Poised for a Capex Surge

The government is expected to focus on increasing capital expenditure by 10-15% in the upcoming Budget. Although the private sector remains cautious, public investment continues to drive demand. Despite challenges in some sectors, experts anticipate growth in capex, aiming for increased economic resilience and development in FY27.

In the upcoming Budget, the government is likely to increase its capital expenditure target by 10-15% from the current Rs 11.21 lakh crore. This move aims to boost economic activity, as private sector players remain cautious, experts suggest.

The Budget, expected to be presented in Parliament on February 1, will offer significant leeway for public investment. According to Ranen Banerjee, PwC's Economic Advisory Services leader, capital expenditure's absorption capacity isn't high enough for a sudden 30% increase, hinting at a more realistic 10% hike.

Chief economist Aditi Nayar highlights uneven growth in private capex across sectors, with traditional industries like cement and steel expanding, while data centers and renewable energy sectors show more promise. With fiscal considerations in mind, FY27 might see prioritization of capex before pay revisions make new allocations challenging.

(With inputs from agencies.)