New Delhi New Delhi: The central government’s efforts on infrastructure development and investments in key sectors such as railways, defence, power and data centres are expected to boost the growth momentum in financial year (FY) 2026 and beyond, a report by financial services firm Prabhudas Lilladher (PL) said. According to the report, the foundation for a gradual economic recovery seems to be taking shape due to the government’s efforts to accelerate capital expenditure (capex) spending. Total capital expenditure by the Centre for FY25 was set at Rs 11.1 trillion. The report further said that early signs of increased order activity in these sectors highlight the potential for quick execution, which could act as a catalyst for broader economic revival.
“With food inflation hitting an all-time high of 10.9 per cent in October and the government looking to accelerate capital expenditure, we expect a gradual economic recovery. We see an acceleration in the pace of ordering in railways, defence, power, data centres, etc., execution of which will drive growth in FY26 and beyond,” the report said. It added that the upcoming budget will be instrumental in shaping this recovery, with a growth-driven focus expected to boost middle-class spending and balance fiscal discipline. According to the report, although revenue collections may fall short of targets, the expected measures to boost the economy could provide the much-needed boost to stimulate demand and support long-term growth. For investors, the recently evolving scenario offers attractive opportunities across multiple structural themes, according to the report. India’s capital expenditure story, encompassing capital goods, infrastructure and emerging technologies, stands out as a key growth driver. Additionally, sectors such as healthcare, tourism, discretionary consumption and financialisation are expected to benefit from the recovery, the report said.
