Public capex is doing the heavy lifting, and the figures aim at a decade's high

The government aims to sustain economic momentum through strong public investment in infrastructure, at a time when private sector capital expenditure remains tentative and uneven, they said.

Capital expenditure by CPSEs has risen sharply over the past decade, from ₹1.88 trillion in FY14 to ₹3.28 trillion in FY25, marking a 73.6% jump, according to data from the department of public enterprises, under the Union finance ministry.

“CPSEs have been nudged to maintain the momentum in FY26," said the first of the two persons mentioned earlier, both of whom spoke on the condition of anonymity.

“This will be a critical year to anchor growth as the global environment remains uncertain and private investment is yet to see a broad-based pick-up," the person added.

A finance ministry spokesperson didn't respond to Mint's emailed queries.

When combined with investments by infrastructure-heavy agencies such as highways and power ministries, total public capex has more than doubled, from ₹3.11 trillion in FY16 to ₹8.07 trillion in FY25, it added.

For FY26, CPSEs and infrastructure agencies have set a capital expenditure target of ₹7.85 trillion.

This sustained rise reflects the government’s continued emphasis on public investment to spur growth and close critical infrastructure gaps.

In recent years, CPSEs have taken centre stage in executing large-scale infrastructure and industrial projects, ranging from highways and ports to petroleum pipelines and power transmission networks, underpinning economic growth in the post-Covid era.

“As India aims for a sustained high-growth trajectory, the role of CPSEs in delivering timely and efficient capital spending will remain critical," said the second person.

“Their ability to execute large-scale projects swiftly and at scale makes them key to driving infrastructure-led growth, especially when private capex is still finding its footing," added this person.

Sectors expected to see a spending boost this year include railways, oil and gas, renewable energy and heavy industries.

The CPSE capex push is also expected to complement the Centre’s capital outlay, which has steadily increased, from ₹11.11 trillion in FY25 to ₹11.21 trillion in FY26.

In FY24, total capital expenditure by the Centre, CPSEs and state governments stood at ₹17.35 trillion, or 5.87% of GDP, up from ₹13.57 trillion (5.03% of GDP) in FY23, according to data from the ministry of finance.

Capex had seen some fluctuation in the preceding years—It was ₹11.57 trillion (5.76% of GDP) in FY20, but fell to ₹10.70 trillion (5.39% of GDP) in FY21, before recovering to ₹12.57 trillion (5.33% of GDP) in FY22, underscoring the renewed focus on scaling up investments to power India’s growth engine.

India’s gross domestic product (GDP) growth accelerated sharply to 7.4% in the final January-March quarter of FY25, rising from 6.2% in Q3, 5.6% in Q2 and 6.7% in Q1. For the full fiscal year, the economy expanded by 6.5%, slowing sharply from a 9.2% growth in FY24.

The strong growth in Q4FY25 was fuelled largely by an impressive 10.8% expansion in construction activity and a 7.3% rise in services output.

For FY26, India's GDP growth is expected at 6.3%-6.8% amid stable domestic macros despite global uncertainties.