Infrastructure: Looking past budget blues

The recent budget disappointed investors in infrastructure stocks. While capital expenditure is budgeted to grow by 10.1 per cent YoY vs FY25RE to Rs 11.2 trillion, it remains flattish vis-à-vis FY25BE, with the government undershooting its FY25 target by around Rs 900 billion. No change was made to capex outlay for either roads (Rs 2.7 trillion in FY26BE) or railways (Rs 2.5 trillion in FY26BE), which had hitherto seen large increases. The budget did see measures to increase private sector participation and measures to increase state government participation through credit enhancement and soft loans. The pipeline for infrastructure investment remains robust. Between FY08 and FY17, spending reached Rs 60 trillion, while projections for FY20 to FY25 indicate an investment of Rs 111 trillion. The National Infrastructure Pipeline (NIP) reflects plans to invest Rs 143 trillion by 2030. Energy remains the dominant sector, accounting for nearly a quarter of all investments, followed closely by roads and urban development. The railways, irrigation and digital infrastructure sectors also command significant shares of capital allocation. A major driver of infrastructure expansion is the growing participation of the private sector, particularly in renewable energy and digital infrastructure. While government spending still dominates core areas such as power transmission, roads and railways, private enterprises are stepping up investments in green energy projects, transportation networks and digital expansion. Power and transmission: The lifeline of growth India's power demand is rising sharply due to industrialisation, the adoption of electric vehicles, and the growing push toward clean energy. The transmission and distribution (T&D) sector is poised for rap

This article was originally published on March 01, 2025.