• The Indian government is ramping up infrastructure development across key sectors.
• Capital expenditure for FY25 is projected at Rs 11.1 trillion, signaling substantial investment.
• Healthcare, tourism, and emerging tech sectors are anticipated to benefit significantly from these initiatives.
• Food inflation is reportedly stabilizing, which may support economic recovery efforts.
• The upcoming Budget is expected to focus on boosting middle-class spending and fiscal discipline.

NEW DELHI: The Union government's commitment to infrastructure development and its investments in crucial sectors like railways, defense, power, and data centers are poised to drive economic growth into the financial year (FY) 2026 and beyond, according to a report by financial services firm Prabhudas Lilladher (PL) ([source](https://timesofindia.indiatimes.com/business/india-business/governments-infrastructure-investments-to-propel-growth-into-fy-2026-report/articleshow/117177247.cms)). The report highlights that a foundation for gradual economic recovery is emerging, primarily driven by increasing capital expenditure (capex) spending.

The total capital spending by the Central government is budgeted at a remarkable Rs 11.1 trillion for FY25. Notably, early indicators of heightened order activity in essential sectors suggest the potential for accelerated execution, which could serve as a catalyst for wider economic revival. "With food inflation having peaked at 10.9 percent in October, and with government efforts to expedite capital expenditure, we foresee a gradual economic recovery," the report stated. The expected uptick in ordering momentum in sectors such as railways, defense, power, and data centers may further enhance growth prospects in FY26 and beyond.

The upcoming Budget is anticipated to play a crucial role in shaping this recovery, focusing on boosting middle-class spending while maintaining fiscal discipline. While projections indicate that revenue collection might fall short of set targets, the introduction of measures to stimulate demand could provide a much-needed boost to long-term growth. According to the report, the evolving landscape presents promising opportunities for investors, particularly within various structural themes.

The so-called "India capex story" is gaining traction, encompassing capital goods, infrastructure, and emerging technologies, which are identified as significant growth drivers. Moreover, sectors such as healthcare, tourism, and discretionary consumption are well-positioned to capitalize on the recovery phase. The report emphasizes, "We believe the India capex story, including sectors like hospitals and pharmaceuticals, tourism related to aviation and hotels, as well as discretionary consumption in e-commerce, jewelry, and food services, are among the key themes for long-term investments" ([source](https://timesofindia.indiatimes.com/business/india-business/governments-infrastructure-investments-to-propel-growth-into-fy-2026-report/articleshow/117175071.cms)).