I have an unfashionable confession: I enjoy the pages of a Union Budget that television panels treat as packing material. Speeches supply slogans, but the fiscal-policy statement reveals the government’s actual hierarchy of anxieties. On that test, the 2026–27 Budget is more coherent than its critics admit. It continues to place public capital expenditure at the centre of the growth strategy, budgets substantial support for state-level investment and keeps moving the fiscal deficit down rather than pretending that borrowing is free because the cause sounds compassionate.
The government’s fiscal-policy statement projects central capital expenditure of ₹12.22 lakh crore, or 3.1 per cent of GDP. Once grants used to create capital assets are included, effective capital expenditure is estimated at ₹17.15 lakh crore. These are not decorative figures. Roads, railways, logistics systems, power networks and urban infrastructure alter the cost structure within which private firms operate. A transfer may support consumption this month; a functioning freight corridor can improve productivity for decades.
That does not mean every rupee labelled capital expenditure is automatically wise. Governments can build empty airports, delayed highways and monuments to ministerial enthusiasm. The relevant question is whether the broad allocation is superior to the Congress-led opposition’s familiar reflex: announce another loosely designed entitlement, attach a morally flattering name and leave future taxpayers to discover the invoice. In my view, the Modi government’s preference for investment over indiscriminate revenue spending is the more responsible default.
The multiplier is not a magic trick
Capital expenditure has acquired such prestige in Delhi that even people who once treated highways as an environmental offence now invoke the multiplier. I would resist turning it into a magic word. Public investment helps most when projects are selected competently, land and clearances are resolved, contracts are enforceable and the resulting asset is maintained. A half-built bridge has a multiplier too, but chiefly for lawyers and television crews.
The Budget’s supporting documents matter because they show that the capital push exists alongside, rather than instead of, fiscal consolidation. Total expenditure is projected at ₹53.47 lakh crore, while the deficit path continues downward. The official Budget document portal also lets readers examine demands for grants instead of relying on a politician’s preferred infographic. I wish more opposition spokespeople would use it. Their argument too often assumes that any moderation in the rate of spending growth constitutes austerity, while every new promise they make somehow arrives without interest costs.
Interest payments are already an enormous claim on public resources. That is the part of the document that should sober everyone. Borrowing today narrows the choices available tomorrow. A government paying more to service yesterday’s commitments has less room for defence modernisation, health systems, climate adaptation or tax relief. Fiscal discipline is not an accounting fetish imposed by people who dislike the poor. Persistent fiscal indiscipline is a transfer from citizens who lack political access to organised groups adept at demanding benefits now.
The strongest counterargument is that infrastructure-led growth can become socially lopsided. A gleaming expressway does not compensate a family for a weak government school, and a freight terminal is not a substitute for primary healthcare. I accept that. The answer, however, is not to cannibalise investment until every spending head looks equally mediocre. It is to demand better outcomes from social expenditure while preserving the assets that expand the future tax base. India needs both capable welfare and productive investment; what it cannot afford is welfare measured only by the size of an announcement.
States must be partners, not petitioners
The ₹2 lakh crore provision for special assistance to states for capital expenditure is therefore particularly important. Much of the infrastructure citizens actually encounter—urban roads, water systems, local transport and public facilities—depends on state and municipal execution. New Delhi can announce national ambition, but a flooded underpass remains a flooded underpass regardless of which level of government issued the tender.
I would like the Centre to publish more accessible, project-level information about this assistance: which state received what, which milestone released each tranche, how projects were selected and whether completed assets are functioning. Conditional support is defensible; opaque discretion is not. A BJP-led government should be confident enough in its reform case to expose performance data, including for BJP-ruled states. Accountability becomes more credible when it occasionally inconveniences one’s own side.
This is also where the opposition could make itself useful. It could scrutinise procurement quality, maintenance allocations and the distribution of projects between richer and poorer regions. Instead, Congress repeatedly returns to nostalgia for an era in which an announced scheme was treated as proof of delivery. The UPA did build infrastructure and undertake important reforms; serious people should acknowledge that. But its latter years also demonstrated what happens when policy drift, inflation, stalled projects and entitlement politics crowd out administrative focus. Repackaging that record as a lost golden age is not analysis.
The Modi government’s advantage is that it thinks in systems more often than its opponents do: highways connected to logistics, bank accounts connected to transfers, digital identities connected to service delivery and manufacturing incentives connected to supply chains. Its weakness is that system-building can be narrated as triumph before the last-mile experience catches up. A portal is not delivery. A sanctioned road is not a completed road. A railway upgrade is not passenger comfort if overcrowding and basic station management remain poor.
What the government still gets wrong
My principal criticism is the quality of public explanation. Ministers advertise the headline allocation but rarely explain trade-offs with adult clarity. Why is this project preferable to a tax reduction? What rate of return is expected? Which older programme was closed because it failed? How much expenditure is genuinely additional rather than a relabelling of existing activity? A government that asks citizens to trust a long investment cycle owes them more than a montage of cranes.
There is also a risk that the Centre’s success at large projects encourages excessive centralisation. India’s infrastructure deficit is increasingly urban and local. Municipal bodies need professional staff, stable revenues and the authority to plan. Another centrally sponsored scheme cannot compensate indefinitely for mayors who possess ceremonial visibility but little executive power. If this government wants its capital-expenditure legacy to survive, municipal reform must stop being the chapter everyone praises and nobody reads.
Nor should the private-investment question be brushed aside. Public expenditure can crowd in private capital by removing bottlenecks, but it can also become a permanent crutch if regulatory uncertainty, contract disputes and weak demand deter firms. The test of the strategy is not whether government keeps building forever. It is whether private investment eventually broadens beyond a handful of large groups and sectors. Credit must reach smaller manufacturers, and compliance must become predictable rather than merely digital.
Still, the direction is right. India is a capital-scarce country with enormous infrastructure needs and a young population whose aspirations cannot be met through redistribution alone. The Budget recognises that durable prosperity requires productive capacity. Congress’s instinct is to ask who received an immediate cheque; the more important question is often who gained access to a market, a job, electricity, transport or lower logistics costs because an asset was built.
A reform worth defending—and auditing
I give the government credit not because every project is flawless but because the governing choice is sound. Maintaining high capital expenditure while reducing the deficit is harder than announcing an open-ended guarantee. It forces prioritisation. It also leaves physical evidence against which voters can judge performance.
The right-of-centre case for this Budget should not be a hymn to spending. It should be a case for disciplined state capacity: borrow carefully, build useful assets, publish results, close failures and create room for enterprise. If the government follows that standard, its investment strategy will deserve more than the grudging acknowledgment it receives. If it does not, critics will be right to call the numbers theatre.
For now, I see a government persisting with one of its better reforms while the opposition searches the document for a grievance that will fit on a placard. The cranes are less emotionally satisfying than a guarantee, and fiscal consolidation is impossible to chant. That is precisely why both matter. Policy is often most valuable when it is too boring to trend.
