Capex target set at Rs 11.2 lakh crore for FY26, as income tax relief takes centre stage

Capex targets for Fy26

The government continued with the trend of increasing the capex by double digits, as finance minister Nirmala Sitharaman in her Budget for 2025-26 raised the capex target to Rs 11.2 lakh crore, up 9.8 percent from the previous fiscal.

The spending is in line with the median forecast of Rs 11.2 lakh crore of a Moneycontrol poll of 15 economists. The new capex target, however, is only slightly above the previous year’s Budget number of Rs 11.11 lakh crore.

The April-May Lok Sabha elections and a slow pick up in capex spending kept the government from utilising the full amount budgeted for FY25.

In the first eight months, capex spending lagged the previous year’s spending by 12 percentage points. The government was not able to utilise even half of the capex target of Rs 11.1 lakh crore.

The growth in capex has stayed in double digits in six of the past eight years. It slowed down in FY25 from the 28.4 percent growth in FY24 and 24.8 percent in the year before.

Roads and railways account for the highest share of capex, as their share increased from just over 35 percent a decade ago to nearly half in FY25.