Athira Sethu
Kochi, 2 Feb 2026
Capital sector companies saw rising investors’ interest on Monday as the Budget 2026 proposed to increase capital spending. L&T, ABB India, Hitachi Energy and others are on focus as an outcome.
As a measure to encourage private sector investment and ensure that the economy continues to grow, the government has announced a substantial rise in capital expenditure in the coming fiscal year. The proposed capital expenditure (capex) budget for FY27 has been set at Rs 12.2 lakh crores, registering an increase of 8.9% over the current fiscal year. This is a step in the direction of a larger strategy to fast-track the creation of assets, especially in tier 2 and tier 3 cities, which have unrealized growth potential.
While presenting the budget, Finance Minister Nirmala Sitharaman stressed that the capital expenditure strategy is critical to sustaining economic momentum. Over the last decade, the government’s capex expenditure has experienced a remarkable increase, from Rs 2 lakh crores in FY15 to the current proposed budget. This sharp acceleration in spending has been most evident since the onset of the pandemic, as the government attempts to overcome the economic challenges posed by the outbreak of COVID-19.
One of the major initiatives that have been announced in the budget is the establishment of an Infrastructure Risk Guarantee Fund. This fund will offer partial credit guarantees to the lenders, which will help to increase the confidence of private developers in taking up large infrastructure projects. At the same time, the government also intends to improve the domestic production of construction and infrastructure equipment like lifts, fire-fighting equipment, and tunnel boring machines. This will help to cut down India’s dependence on imported equipment.
The proposed increase in the capex budget of the government, with a focus on infrastructure, is expected to promote economic growth and development.
