NewKerala.com

Govt Capex to Hit Rs 12 Lakh Crore in FY27, Up 10%: SBI Report

The State Bank of India projects the central government's capital expenditure will exceed Rs 12 lakh crore in the upcoming FY27 budget, marking a 10% year-on-year increase. This continues a sharp upward trend from Rs 2.5 lakh crore in FY16 to Rs 11.2 lakh crore in the current fiscal's budget estimates. When combined with grants for capital assets and CPSE spending, the effective capex reached Rs 15.5 lakh crore in FY26, maintaining a strong share of GDP at around 5.5%. The report also estimates net central government borrowing for FY27 at approximately Rs 11.7 trillion, against a backdrop of global economic uncertainty.

Key Points: FY27 Budget Capex May Cross Rs 12 Lakh Crore, Says SBI

  • Capex may cross Rs 12 lakh crore in FY27
  • 10% year-on-year growth projected
  • Effective capex reached Rs 15.5 lakh crore in FY26
  • Capex share of GDP strong at ~5.5%
  • Net central borrowing estimated at ~Rs 11.7 trillion
3 min read

Central govt capex may cross Rs 12 lakh crore in upcoming budget for FY27, up 10% YoY: SBI report

SBI report projects 10% rise in central govt capital expenditure for FY27, crossing Rs 12 lakh crore, amid focus on infrastructure-led growth.

"Government capex may cross Rs 12 lakh crore in FY27...a YoY growth of approx. 10 per cent. - SBI Report"

New Delhi, January 27

Capital expenditure by the central government is expected to cross Rs 12 lakh crore in FY27, registering a year-on-year growth of around 10 per cent, according to a report by the State Bank of India.

The SBI report highlighted a steady rise in government-led capital spending over the years, highlighting the continued focus on infrastructure creation and economic growth.

It stated, "Government capex may cross Rs 12 lakh crore in FY27...a YoY growth of approx. 10 per cent."

Data from the report showed that total capital expenditure through the Budget increased sharply from Rs 2.5 lakh crore in FY16 to Rs 11.2 lakh crore in FY26, as per Budget Estimates.

Grants for the creation of capital assets have also shown a rising trend. These grants increased from Rs 1.3 lakh crore in FY16 to Rs 4.3 lakh crore in FY26, reflecting higher support for asset creation at various levels of government.

The report also shared that capital expenditure by Central Public Sector Enterprises (CPSEs), funded through internal and extra-budgetary resources, stood at Rs 4.3 lakh crore in FY26. When budgetary capex and grants are combined, effective capex rose significantly over the years, reaching Rs 15.5 lakh crore in FY26.

The grand total capex, which includes budgetary spending, grants for capital assets and CPSE capex, increased from Rs 7.0 lakh crore in FY16 to Rs 19.8 lakh crore in FY26.

As a share of GDP, capital expenditure remained strong at around 5.5 per cent in FY26, highlighting the government's sustained push towards infrastructure-led growth.

On the borrowing front, the report estimated that net central government borrowing for FY27 is likely to be around Rs 11.7 trillion, which is close to 70 per cent of the fiscal deficit. Repayments are expected to be around Rs 4.60 trillion, including an expected buyback of Rs 1 lakh crore and estimated switches of Rs 1.5 trillion.

At the state level, gross borrowings are projected at Rs 12.6 trillion, with repayments estimated at Rs 4.2 trillion.

The report noted that there is a possibility of scaling down State Development Loans (SDLs) through meaningful reforms, which could help reduce net state borrowings. It also indicated that net central borrowings could be managed through higher borrowing via treasury bill issuance.

The report added that the presentation of the Union Budget comes at a time of heightened global uncertainty. It pointed to the emerging global realignment and its cascading impact on financial markets, where stretched equity and bond markets have seen volatility due to misplaced trust.

The report also flagged concerns around crude oil prices, questioning whether crude could break out of the current supply-driven stability and join the broader commodity rally, even if only for a short period.

The Union Budget 2026 will be presented on Sunday, February 1.

- ANI

Share this article:

Reader Comments

P
Priya S
Good to see the numbers, but execution and timely completion of projects is key. We've all seen highway projects stuck for years. The government must ensure this massive spending doesn't get stuck in bureaucratic delays and actually benefits common people. Also, hope some focus remains on social infrastructure like hospitals and schools.
R
Rohit P
While infrastructure spending is welcome, the borrowing numbers are concerning. Net borrowing of ₹11.7 lakh crore? That's a huge burden on future generations. We need a balance. Growth is important, but fiscal prudence cannot be ignored. Hope the budget also outlines a clear path for reducing the fiscal deficit over the medium term.
S
Sarah B
The report mentions grants for capital assets at state levels increasing. This is crucial. Real development happens at the district and village level. Empowering states with funds for local infrastructure—like water supply, rural roads, and cold storage for farmers—can have a massive multiplier effect. Hope this trend continues.
V
Vikram M
The mention of global uncertainty and crude oil prices is the real elephant in the room. 🇮🇳 Our growth story can't afford another oil price shock. We need to accelerate our green energy transition alongside this infra push. Investing in solar, wind, and EVs is also capital expenditure for a secure future.
K
Karthik V
As a professional in the construction sector, this is excellent news. Sustained government capex means sustained demand for materials, engineering services, and jobs. It creates a virtuous cycle. My only request: please streamline the payment processes to MSME contractors. Delayed payments cripple small businesses even when the order book is full.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50