The Centre’s capital expenditure on big-ticket infrastructure projects and critical sectors like defence will propel India’s economic growth in FY26 and beyond, according to a report by Prabhudas Lilladher (PL).
The report highlights growing momentum in railways, defence, power, and data centers. It predicts that these sectors will further accelerate growth in FY26. The government allocated Rs 11.1 lakh crore for infrastructure in the 2024-25 budget. The upcoming 2025-26 budget is likely to increase this allocation.
Budget’s Role In Stimulating Demand
The report emphasizes that the government’s efforts to pump-prime the economy will boost demand and support long-term growth. It suggests that the forthcoming budget will play a key role in economic recovery. The focus is expected to be on growth-driven measures that encourage middle-class spending as inflation eases.
Sectors like healthcare, tourism, discretionary consumption, and financialization will benefit from the recovery, the report adds.
Industrial growth surged to a 6-month high of 5.2% in November 2024, up from 3.5% in October, according to data from the Ministry of Statistics. This marks a sharp rise from the 2.5% recorded in November 2023.
Manufacturing, which contributes over three-fourths of industrial output, grew by 5.8% in November, up from 4.1% in October. This growth signals increased job opportunities, especially for graduates from engineering institutes and universities.
Capital goods production, a key investment indicator, rose by 9%. This growth reflects robust real investments that create jobs and boost incomes. Additionally, consumer durables production jumped by 13.1%, showing higher demand for items like electronics, refrigerators, and TVs.
These trends highlight the effectiveness of the government’s infrastructure investments and industrial policies in driving India’s economic growth.
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