Space, telecom and science see capex boost in FY27; steel, atomic energy and petroleum face sharp cuts

Space and science get a boost

• FY27 Budget boosts capex for telecom, science, and space ministries
• Defence capex rises to Rs 2.19 lakh crore, now 17.9 percent of total spending
• Steel, atomic energy, and petroleum ministries see major capex cuts

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Capital expenditure allocations in the FY27 Budget show a clear sectoral re-prioritisation, with sharp increases for space, telecom and science-linked ministries, even as traditional heavy industries such as steel, atomic energy and petroleum see sizeable pullbacks.

The Department of Telecommunications is among the biggest gainers. Its capital outlay has been raised to Rs 47,275 crore in FY27, nearly doubling from Rs 23,916 crore in FY26 (RE). As a share of total capex, telecom's allocation has jumped to 3.9 percent from just 2.2 percent, reflecting a 1.7 percentage point increase—one of the steepest increases across ministries. In absolute terms, telecom capex is up by Rs 23,359 crore year-on-year, with a near Rs 2 lakh crore increase during this period.

Spending on science has also seen a sharp step-up. The Department of Science and Technology (DST) has been allocated Rs 20,085 crore in FY27, compared with just Rs 3,083 crore in FY26 (RE). This translates into a sixfold increase in absolute terms, with its share of total capex rising from 0.28 percent to 1.64 percent, an increase of 1.36 percentage points, the largest proportional jump among all ministries.

Defence-linked capital expenditure continues to rise as well. Capital outlay on defence services has been raised to Rs 2.19 lakh crore in FY27, up from Rs 1.86 lakh crore in FY26, an increase of Rs 32,852 crore. Defence capex now accounts for 17.9 percent of total capital spending, up from 17.0 percent a year earlier.

In contrast, several traditional infrastructure and commodity-linked ministries have seen allocations shrink.

The Ministry of Steel has witnessed one of the steepest cuts. Its capex allocation has been slashed to just Rs 3.3 crore in FY27, from Rs 3,020 crore in FY26 (RE). As a share of total capex, steel has dropped from 0.28 percent to near zero.

Similarly, Atomic Energy has seen its capital allocation reduced to Rs 9,966 crore, down from Rs 12,062 crore last year, a decline of over Rs 2,095 crore, with its share of capex falling from 1.10 percent to 0.82 percent.

The Ministry of Petroleum and Natural Gas has faced an even sharper contraction. Its capex allocation has been cut to Rs 238 crore in FY27, compared with Rs 1,407 crore in FY26, implying a reduction of over Rs 1,168 crore and a drop in capex share from 0.13 percent to just 0.02 percent.