Centre’s FY27 Capital Expenditure Likely to Cross ₹12 Lakh Crore: SBI

India’s central government is expected to maintain a strong focus on capital expenditure, with spending projected to cross ₹12 lakh crore by FY27, underlining its continued emphasis on infrastructure-led growth, according to a State Bank of India (SBI) report. 

Rising Central Government Capex and Asset Creation 

The SBI report points to a consistent increase in government-led capital spending over the past decade. Central government capital expenditure through the Budget has risen sharply from ₹2.5 lakh crore in FY16 to ₹11.2 lakh crore in FY26 as per Budget Estimates.  

Reflecting this momentum, the report stated, "Government capex may cross Rs 12 lakh crore in FY27. a YoY growth of approx. 10%.” 

Alongside this, grants for the creation of capital assets have also expanded significantly, increasing from ₹1.3 lakh crore in FY16 to ₹4.3 lakh crore in FY26, indicating stronger support for asset formation across different levels of government. 

Effective Capex and Role of CPSEs 

Capital spending by Central Public Sector Enterprises (CPSEs), financed through internal and extra-budgetary resources, stood at ₹4.3 lakh crore in FY26. When combined with budgetary capex and grants for capital assets, effective capital expenditure reached ₹15.5 lakh crore in FY26. 

The report noted that total capex including budgetary spending, grants and CPSE investment, increased from ₹7.0 lakh crore in FY16 to ₹19.8 lakh crore in FY26.  

As a proportion of GDP, capital expenditure remained robust at around 5.5% in FY26, reinforcing the government’s sustained infrastructure push. 

Borrowing Outlook and Global Risks 

On the financing side, SBI estimated net central government borrowing for FY27 at around ₹11.7 trillion, close to 70% of the fiscal deficit. Repayments are projected at about ₹4.60 trillion, including a potential buyback of ₹1 lakh crore and switches of around ₹1.5 trillion. State-level gross borrowings are estimated at ₹12.6 trillion, with repayments of ₹4.2 trillion. 

The report also highlighted the scope for reducing net state borrowings through reforms in State Development Loans (SDLs), while noting that higher treasury bill issuance could help manage central borrowings.  

It added that the Union Budget is being presented amid heightened global uncertainty, marked by volatility in equity and bond markets and concerns over crude oil prices potentially joining a broader commodity rally.  

Read More: SBI Hits New Peaks After 286% 5-Year Surge: What’s Driving the Momentum? 

Conclusion  

The SBI report highlights India’s continued reliance on capital expenditure to drive growth, with rising budgetary spending, CPSE investment and asset-creation grants. Despite global uncertainty and borrowing pressures, strong capex levels signal the government’s commitment to infrastructure development and long-term economic expansion. 

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