Budget 2026: All eyes are on the mega-policy event—the Union Budget 2026. Finance Minister Nirmala Sitharaman will present her ninth budget on Sunday, February 1, and is expected to reinforce the government’s focus on accelerating economic growth while maintaining fiscal prudence. In this context, the Center is likely to step up spending on the infrastructure sector to boost growth, generate employment, and further advance the “Atmanirbhar Bharat” goal.
As hopes for a significant push into the infrastructure sector rise, experts are turning more positive about the sector.
“A Budget that sustains infrastructure capex, strengthens export support and enhances sector-specific competitiveness will both bolster domestic growth and signal confidence to investors,” said Sreeram Ramdas, Vice President at Green Portfolio PMS.
Budget to increase infra outlay?
Experts believe the government will announce an increase in infrastructure spending in the Budget 2026.
According to Radhika Rao, Senior Economist and Executive Director at DBS Bank, the Budget will likely announce higher capital expenditure outlays for infrastructure, which includes railways, roads, highways, defence, and transfers to states, collectively representing around 80% of effective capex.
Sujan Hajra, Chief Economist and Executive Director at Anand Rathi Group, believes that while overall capex should remain strong, its distribution is likely to change.
“While geopolitical risks persist, we expect the growth in defense outlays to moderate. This does not mean defense spending will decline, but its growth rate could slow. As a result, sectors such as energy and other infrastructure segments could see relatively higher increases in allocation,” said Hajra.
Ajitabh Bharti, the co-founder and executive director of CapitalXB, underlined that over the past few years, sustained public investment in highways, railways, logistics corridors, and urban infrastructure has materially improved connectivity and reduced friction across supply chains.
Bharti said the government may further increase the outlay for the infrastructure sector in the Budget, with a continued focus on transport, logistics, and urban assets.
“Alongside physical infrastructure, sharper attention to digital public platforms, institutional capability, and human capital will be critical to improving productivity and supporting long-term, sustainable growth—particularly for MSMEs that remain central to economic activity,” said Bharti.
“The Indian government is widely expected to step up infrastructure spending in the Union Budget 2026–27, reinforcing its strategy of using public investment as a core driver of economic growth,” said Seema Srivastava, Senior Research Analyst at SMC Global Securities.
Srivastava underlined that over the past few years, infrastructure-led capex has become the backbone of India’s growth model, particularly at a time when global uncertainty and cautious corporate sentiment have constrained private investment.
“The upcoming budget is likely to continue this approach, with meaningful implications for growth, employment, and long-term competitiveness,” said Srivastava.
Srivastava believes that for FY27, central government capital expenditure may rise to around 3.1–3.2% of GDP, translating into a year-on-year increase of roughly 7–12% compared to FY26.
“Roads and highways are likely to continue receiving strong support to expand national connectivity. Railways should see increased investment for modernization and capacity enhancement. Renewable energy, ports and logistics infrastructure are expected to attract greater focus, aligning with India’s energy transition goals and export ambitions,” said Srivastava.
Infra stocks to buy
Experts appear upbeat about the infrastructure sector but suggest picking stocks with strong fundamentals from the sector.
Drumil Vithlani, Technical Analyst at Bonanza, said investors can consider Hindustan Construction Company (HCC, GMR Airports, Kalpataru Projects International, Larsen and Toubro, and Dilip Buildcon from the sector.
Ajit Mishra, SVP of Research at Religare Broking, recommends Ultratech and Dalmia Bharat from the cement space, and KEC International from the power EPC segment.
Mishra is also positive on Power Grid from the power transmission segment and NCC from the infrastructure space.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
