Capex target will be raised to Rs 12.2 lakh crore for FY27, says FM

Union Finance Minister Nirmala Sitharaman on Sunday announced a sharp increase in the Centrersquos capital expenditure outlay for the next financial year raising it by around nine per cent to Rs 122 lakh crore in the Union Budget 2026Capex remains key policy lever amid global uncertaintyPresenting the Budget in Parliament Sitharaman said the enhanced allocation is aimed at sustaining the pace of infrastructure creation and reinforcing economic growth at a time when global conditions remain uncertain Capital expenditure has been one of the governmentrsquos primary policy levers over the past decade helping drive demand employment and private investmentPublic capital spending has risen manifold since 2014ndash15In her Budget speech the Finance Minister underlined the significant expansion in public capital spending since 2014ndash15 Public capital expenditure has increased manifoldmdashfrom about Rs 2 lakh crore in 2014ndash15 to 112 lakh crore in 2025ndash26 For the coming financial year 2026ndash27 I propose to raise it further to Rs 122 lakh crore to maintain this momentum she saidUrban infrastructure tier2 and tier3 cities remain focus areasSitharaman noted that infrastructure development has remained a central focus of the governmentrsquos economic strategy over the last ten years She pointed to multiple initiatives taken to upgrade public infrastructure at scale including the introduction of innovative financing mechanisms such as Infrastructure Investment Trusts InvITs and Real Estate Investment Trusts REITs which have helped mobilise longterm capitalThe Finance Minister also highlighted the role played by dedicated institutions such as the National Investment and Infrastructure Fund NIIF and the National Bank for Financing Infrastructure and Development NaBFID in supporting infrastructure financing and reducing pressure on traditional banking channelsLooking ahead Sitharaman said the government will continue to prioritise infrastructure development in cities with populations exceeding five lakh These include many tier2 and tier3 cities which have grown rapidly over time and are emerging as key engines of regional economic growth Improved urban infrastructure in such cities she said is critical for improving quality of life and attracting investmentInfrastructure risk guarantee fund proposed to crowd in private investmentAddressing concerns raised by private sector participants the Finance Minister announced a new proposal aimed at boosting confidence among private developers She acknowledged that risks associated with the development and construction phases of infrastructure projects often discourage private participationTo tackle this challenge Sitharaman proposed the creation of an infrastructure risk guarantee fund The proposed fund will offer prudentially calibrated partial credit guarantees to lenders helping lower perceived risks and facilitate smoother access to finance for infrastructure projectsShe said the combination of higher capital expenditure continued emphasis on urban infrastructure and targeted measures to crowd in private investment reflects the governmentrsquos longterm commitment to infrastructureled growthThe increased capex outlay in the Union Budget 2026 is expected to support sectors such as roads railways urban development and logistics while also creating a multiplier effect across the broader economy