Budget 2026: More capex, support for flagship programmes essential for infra sector, say analysts

Capex allocation for FY26 was up 10% YoY

• Analysts urge higher capex and infrastructure spending in FY27 Union Budget
• Roads and highways expected to dominate government capex, maintaining 25% share
• Energy transition focus needed to meet 2030 and 2070 climate targets

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Analysts for the infrastructure sector urged the government to ramp up capital expenditure allocation and infrastructure spending in the upcoming Union Budget for FY27, including more support for flagship infrastructure programmes, as well as on energy transition.

“India’s Union Budget 2026 must sustain the infrastructure-led growth trajectory with a capex outlay near Rs 12 lakh crore, reinforcing roads, railways and logistics to unlock economic multipliers. Continued priority for marquee programmes — including Bharatmala Pariyojana Phase 2.0 to expand national corridors and boost freight efficiency — is essential for connectivity and jobs,” said Jagannarayan Padmanabhan, Senior Director and Global Head, Consulting, Crisil Intelligence.

On funding India's energy transition, he added, "A strategic focus on the energy transition is critical: India’s target of 500 GW non-fossil capacity by 2030 and net-zero by 2070 requires enhanced fiscal incentives for renewables, green hydrogen, storage and grid modernisation to attract capital at scale”.

The Union government had allocated Rs 11.21 lakh crore (budgetary estimates) towards capital expenditure in last year's Union Budget, a growth of around 10% over that of FY25.

Till November 2025, nearly 60% of the capital expenditure programme had been completed, although orders in segments such as roads and highways, which corners around 25% of the total allocation, had trailed amid concerns around execution.

Road awards by the NHAI also remained on the lower end till November, with less than 10% of the targeted length being awarded. However, market sources said that awards have picked up since.

Players and observers in the roads and highways space say that awards in FY27 are expected to be in the range of FY26 and is expected to dominate overall government capex.

“Roads and highways continue to dominate government capex, which has consistently accounted for around 25% of budgetary allocation over the past five years and is expected to remain at similar levels going forward. The Ministry had spent Rs. 2.85 lakh crore (105%), higher than the Rs. 2.72 lakh crore of the revised budget allocation in FY2025. In line with past trends, the Ministry is expected to fully utilise the budgetary support in FY2026 as well…,” said Suprio Banerjee, Vice President & Co-Group Head, ICRA.