Budget 2026: India sets record Rs 12.2 trillion infrastructure outlay

Indian government will allocate a record 12.2 trillion rupees towards infrastructure spending in the financial year beginning April 1, Finance Minister Nirmala Sitharaman said on Sunday while presenting the Union Budget.

The infrastructure outlay for 2026-27 marks an increase of 8.8% over the 11.21 trillion rupees budgeted for the current fiscal year, which itself was the highest infrastructure allocation on record.

The government has steadily increased capital expenditure since the COVID-19 pandemic, positioning infrastructure spending as a central pillar of its economic strategy. The approach aims to support growth, improve capacity across sectors and generate employment in the world’s most populous country.

Markets responded positively to the announcement, with shares of several capital goods and infrastructure-related companies moving higher. Larsen & Toubro, IRB Infra, NBCC and Action Construction rose between 1.3% and 4%, reflecting expectations of sustained project execution and continued public investment in infrastructure.

Analysts, however, offered a mixed assessment of the scale of the increase. “The capex outlay for fiscal year 2027 looks a bit modest and misses market expectations slightly, but overall, a positive for the manufacturing sector. It will also be good for private sector capex,” said Amit Anwani, an analyst at Prabhudas Lilladher.

India’s economy has so far remained resilient despite punitive tariffs imposed by U.S. President Donald Trump. Economic growth for the year ending March 31 has been forecast at 7.4%, supported by government-led infrastructure spending as well as income and consumption tax cuts that helped lift consumer spending.