Growth driver: India exploring ways to increase capex above Rs 11.21 lakh, says report
Robust capital expenditure by the Union government has been one of the key drivers of growth and employment in the country since the onset of the Covid 19 pandemic. Reports indicate that the finance ministry is trying to find out ways to exceed the capex of Rs 11.21 lakh crore this year in the next year's budget.
Kolkata: Government capital expenditure -- investment in rail, roads, ports etc -- has been a key driver of the Indian GDP in this decade. Reports have stated that the government, desirous of maintaining the achieve the dual objective of building economic assets and driving GDP growth, has begun deliberations with different ministries and departments to explore how to push its own capex above the figure of Rs 11.21 lakh crore budgeted this year.
Reports have also stated that the government is considering whether it could target capital expenditure into urban infrastructure and sunrise industries, which are two new areas.
Rising importance of government capex
The Centre pumped up capital expenditure since the pandemic. Data show that the government capex has risen from Rs 4.3 lakh crore to Rs 11.21 lakh crore in FY26. In comparison, capex rose slower between FY15 and FY20 -- from Rs 2 lakh crore to Rs 3.4 lakh crore. Even as a share of the country's GDP, capital expenditure moved from 2.1% in FY21 to 3.4% in FY25.
The government is trying to ensure proper utilisation of the capex allocated this year. In Q1 (April-June) of FY26, 25% of the budgeted amount has repotedly been utilised.
Lack of private capex
The onus for capex has, in a way, fallen on the government because private capex is languishing in the country. In fact, the country's largest bank SBI has cautioned that it would be lower than the level of FY25 and apprehends that the US retaliatory tariff could drive it down even further. State Bank of India based its observation on a survey of 2,170 firms conducted in April 2025 in sectors such as agriculture, manufacturing, IT and other sectors.
The report said private capex was recorded at Rs 3.9 lakh crore in FY22 and sharply rose to Rs 5.7 lakh crore in FY23 only to dip to Rs 4.2 lakh crore in FY24. The figure projected for private capex for the current financial year is Rs 6.6 lakh crore. Though it appears higher, SBI is of the opinion that is not appropriate to drive growth at the current scale of the country's economy.
Push to aggregate consumption
The government has taken out all stops to boost consumption and give a consumption push to growth. It has given substantial income tax relief in the current financial year and lowered GST rates in the biggest such rejig since the launch of the indirect tax in July 2017. The Reserve Bank of India, too, has lowered Repo rate by 100 basis points between February and June. What impact all these have the consumption will become clearer after the festive season by the end of the year.
It is estimated that 60% of the Indian GDP is due to private consumption, leading the government to pave the way for improved consumption.