SBI Sees Sharp Rise in Centre’s FY27 Capital Expenditure
Government capex projected to grow 10% year on year amid infrastructure push
New Delhi, Jan 27 : Capital expenditure by the central government is projected to exceed Rs 12 lakh crore in FY27, marking an estimated year on year growth of about 10 per cent, according to a report by the State Bank of India (SBI).
The report highlighted a consistent rise in government led capital spending over the past decade, underlining the continued emphasis on infrastructure development and economic expansion. It noted that budgetary capital expenditure increased sharply from Rs 2.5 lakh crore in FY16 to Rs 11.2 lakh crore in FY26, based on Budget Estimates.
Grants allocated for the creation of capital assets have also expanded significantly, rising from Rs 1.3 lakh crore in FY16 to Rs 4.3 lakh crore in FY26, reflecting enhanced support for asset building across different tiers of government.
SBI said capital spending by Central Public Sector Enterprises (CPSEs), financed through internal and extra-budgetary resources, stood at Rs 4.3 lakh crore in FY26. When combined with budgetary capex and asset-creation grants, effective capital expenditure reached Rs 15.5 lakh crore in FY26.
Overall capital outlay including budgetary spending, grants and CPSE investment rose from Rs 7.0 lakh crore in FY16 to Rs 19.8 lakh crore in FY26. As a proportion of GDP, capital expenditure remained robust at around 5.5 per cent in FY26, highlighting the government’s sustained infrastructure led growth strategy.
On the fiscal front, the report estimated net central government borrowing for FY27 at about Rs 11.7 trillion, accounting for nearly 70 per cent of the fiscal deficit. Repayments are projected at around Rs 4.60 trillion, including a proposed buyback of Rs 1 lakh crore and debt switches of approximately Rs 1.5 trillion.
At the state level, gross borrowings are expected to reach Rs 12.6 trillion, with repayments estimated at Rs 4.2 trillion. The report suggested that meaningful reforms could help scale down State Development Loans, thereby reducing net state borrowings.
SBI also flagged heightened global uncertainty ahead of the Union Budget 2026, pointing to geopolitical realignments and their spillover effects on volatile equity and bond markets. It raised concerns over crude oil prices, noting the possibility of a temporary breakout from the current supply driven stability.
The Union Budget 2026 is scheduled to be presented on Sunday, February 1.
