The government is optimistic about its capital expenditure (capex) plans for FY26 and expects the allocation for the current financial year to surpass the initial estimate of Rs 11.21 lakh crore, finance ministry sources told Business Today TV.

Capex in the first two months of FY26 (April-May) rose 54 per cent year-on-year to Rs 2.21 lakh crore, compared to Rs 1.44 lakh crore in the same period last year.

This accounts for 19.7 per cent of the total budgeted capex of Rs 11.21 lakh crore for the year, reflecting the government’s strategy of front-loading expenditure to stimulate economic demand.

The strong momentum in the first three months of FY26 has also raised expectations that the full-year capex could outperform earlier projections.

When asked about possible concerns, if any, the official said India needs to focus on boosting manufacturing and creating new investment opportunities through both public and private capex to sustain its economic growth path.

“Private capex still remains a concern and needs to be pushed further,” the official added.

On global challenges, the official noted that current trade tensions are unlikely to derail India’s fiscal trajectory. Instead, they present an opportunity for the government to step up spending and accelerate growth.

Capex rose to Rs 10.52 lakh crore in FY25, exceeding the annual target by 3.3 per cent.

According to the latest Union Budget, India remains committed to reducing its fiscal deficit to 4.4 per cent of GDP in FY26, though the government may lower it further to around 4.2–4.3 per cent.