States, science, and defence get a lion’s share of increased capex funding

States, science, and defence get a lion’s share of increased capex funding

The pivot towards science and technology seems to be showing in the government’s capital spending, as the sector accounted for around 20 percent of the increased capex, according to a Moneycontrol analysis.

The government delivered a Rs 1.03 lakh crore push to capex in FY26, increasing the allocation in the Budget to Rs 11.21 lakh crore from Rs 10.18 lakh crore in FY25 (revised estimates).

The capital outlay for science and technology increased 273-fold. The government budgeted Rs 20,095 crore for the department, compared with Rs 73.4 crore spent in the previous fiscal year.

Science and Technology is not the only ministry to witness a spectacular rise in capex; the allocation for the Ministry of Petroleum and Natural Gas was up 19.4 times over the last year.

Science and technology funding is all expected to go to research and innovation.

Like last year, defence retained its top spot with a Rs 20,500 crore extra allocation, while states received Rs 31,220 crore extra as the government expects to continue its infrastructure push.

Last year, defence, states and police constituted a major share of spending by the government.

Telecom’s capex is expected to decrease further in FY26, as the sector will spend Rs 51,784 crore, compared with Rs 75,000 crore spent in FY25 and Rs 85,000 crore spent in FY24.

Steel is also a big loser, as the capex is expected to come down from Rs 8,500 crore to Rs 3,000 crore.

Roads and rail share dip in capex

In overall capex, roads, rail, states and defence still had the highest share, with the four accounting for 78 percent of the total capex allocation for FY26.

An earlier Moneycontrol analysis of Budget documents showed that the share of roads, rail and defence allocations, which account for nearly two-thirds of the government’s total capex spend, is set to decline to its lowest level of 62.8 percent in FY26.

Road capex is set to decline for the first time in a decade, as the ministry plans to spend Rs 2.72 lakh crore in FY26.

Railways capex is also flat from the previous year, as the government allocated Rs 2.52 lakh crore for FY26, similar to what it spent in the previous fiscal.