Union Budget 2026 increases FY27 capital expenditure to ₹12.2 lakh crore, 4.4% of GDP

Union Finance Minister Nirmala Sitharaman on Sunday (February 1, 2026) announced an increase of about 9% in capital expenditure for the coming financial year, raising the allocation to ₹12.22 lakh crore in the Union Budget 2026-27.

This is the “highest-ever capital expenditure and works out to be 4.4% of GDP”, according to Ms. Sitharaman’s statement at a post-budget conference in New Delhi.

“We have announced that ₹12.22 lakh crore is coming through public expenditure. This time it is 4.4% of GDP, which is the highest at least in the last 10 years, it could even be the highest if you were to take data of earlier period,” she added.

Mr. Sitharaman said the significant increase in capex allocation is aimed at continuing the momentum in infrastructure development and supporting economic growth.

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Capital expenditure or capex, is the money spent by the government on development or to acquire, or to upgrade machinery or assets. The capital expenditure for FY27 is 10% higher than the ₹11.11 lakh crore budgeted capex announced in FY26.

“Public capex has increased manifold from ₹2 lakh crore in FY2014-15 to an allocation of ₹11.2 lakh crore in BE 2025-26. In FY2026-27, I propose to increase it to ₹12.2 lakh crore to continue the momentum,” the Budget document read.

The capital expenditure was 2.5% of GDP in 2021-22 and around 4% of GDP in 2024-25. The government’s capital expenditure was ₹2.35 lakh crore in 2015-16.

Capital payments consist of capital expenditure on acquisition of assets like land, buildings, machinery, equipment, as also investments in shares, etc., and loans and advances granted by the Central Government to the State and the Union Territory Governments, Government companies, Corporations and other parties.

With PTI inputs