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India’s Infrastructure Push to Drive Economic Growth Through FY26: Report

The report highlights that the government's efforts to ramp up capital expenditure (capex) are laying the foundation for a gradual economic recovery.

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The Union government's focus on infrastructure development and investments in critical sectors such as railways, defense, power, and data centres is projected to fuel economic growth through FY2026 and beyond, according to a report by financial services firm Prabhudas Lilladher (PL).

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The report highlights that the government's efforts to ramp up capital expenditure (capex) are laying the foundation for a gradual economic recovery. The total capital spending by the Centre has been budgeted at Rs 11.1 trillion for FY25, marking a significant boost to infrastructure development.

Signs of increased order activity in key sectors such as railways, defense, power, and data centres indicate potential for accelerated execution, which could drive broader economic revival. "With food inflation peaking at 10.9% in October and the government's push for accelerated capex spending, we anticipate a gradual economic recovery," the report stated.

Looking ahead, the upcoming Union Budget is expected to play a crucial role in shaping this recovery, with a focus on boosting middle-class spending while maintaining fiscal discipline. While revenue collection may fall short of targets, measures aimed at stimulating demand and supporting long-term growth are expected to provide a much-needed boost to the economy.

For investors, the evolving landscape presents promising opportunities across various structural themes. The India capex story—spanning capital goods, infrastructure, and emerging technologies—stands out as a key growth driver. Additionally, sectors such as healthcare, tourism, discretionary consumption, and financialization are set to benefit from the recovery.

Key themes for long-term gains include capital goods, infrastructure, ports, new energy, data centres, railways, defense, healthcare, tourism, discretionary consumption, and financialization.

Also Read: India's GDP Growth Shows Recovery Signs After Dip

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