India’s economic growth for the financial year 2025-26 and beyond is expected to be propelled by the Centre’s significant capital expenditure on infrastructure projects, according to a report by financial services firm Prabhudas Lilladher (PL). The report highlights key infra investments in highways, railways, power development, and defence as critical drivers of this anticipated growth.
The government allocated ₹11.1 lakh crore for infrastructure projects in the 2024-25 budget. This amount is expected to see an increase in the upcoming 2025-26 budget. This rise in expenditure is seen as a crucial step toward stimulating demand and sustaining long-term economic growth.
Boost to Economic Momentum
The report highlights increased activity in sectors such as railways, defence, power, and data centres. This momentum is expected to accelerate execution and drive growth in FY26 and beyond.
Anticipated economic measures could offer a strong boost, particularly as easing inflation paves the way for a growth-oriented budget.
The report also predicts gains for sectors like healthcare, tourism, discretionary consumption, and financialisation. This outlook is further supported by India’s industrial output, which hit a six-month high of 5.2% in November 2024, rising from 3.5% in October and significantly up from 2.5% in November 2023.
Manufacturing and Capital Goods on the Rise
Manufacturing, which constitutes over three-fourths of the Index of Industrial Production (IIP), showed accelerated growth, recording a 5.8% increase in November 2024 compared to 4.1% in October. This sector plays a critical role in generating quality jobs for young graduates and driving economic momentum.
The production of capital goods, a key indicator of real investment in the economy, surged by 9% in November 2024. This reflects rising investments with a multiplier effect on job creation and income generation. Similarly, consumer durables production saw a 13.1% increase, signaling higher consumer demand driven by rising incomes.
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Shaping Economic Recovery
The forthcoming budget is expected to focus on middle-class spending and measures to drive economic recovery. By addressing key growth sectors and ensuring sustained public investment in infra, the government aims to foster a robust and resilient economic environment.
As industrial growth and capital expenditure continue to strengthen, India’s trajectory for FY26 appears poised for further acceleration, bolstered by both domestic demand and strategic investments.
First reported by IANS.
