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

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

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)