Public capital expenditure remains the most important device for sustaining India’s growth momentum. PHDCCI’s pre-budget recommendations highlight infrastructure as the highest-impact priority, given its strong output multipliers. Investments in roads, railways, ports, urban transport, water systems, and power distribution directly kindle demand while lowering long-term logistics costs for industry. Allocations with national initiatives such as Gati Shakti and urban resilience programmes can further enhance efficiency and private sector participation would go a long way to take India to 10% growth path.
Evidence from past capex cycles suggests upfront infrastructure spending not only creates large-scale construction employment but also brings in private investment by reducing risk and transaction costs. A decisive infrastructure push in Budget 2026–27 would strengthen productivity, improve competitiveness, and support durable medium-term growth.
Manufacturing & MSMEs: Rebuilding India’s Investment Engine
Manufacturing-led growth in MSME requires policy stability, and predictable incentives. A renewed focus on scaling manufacturing and MSMEs through capital support, tax rationalisation, and production-linked incentives is necessary. High input costs, long maturation periods, and global competition and uncertainty continue to restricts domestic manufacturing capacity.
Rationalisation of customs duties on critical raw materials and extending concessional tax for new manufacturing units can significantly improve investment viability. Strengthening credit guarantees and industrial infrastructure would also support MSMEs’ transition into formal global value chains.
As manufacturing remains central to job creation, export growth, and supply chain resilience the upcoming Budget 2026–27 presents an opportunity to strengthen India’s manufacturing determination by shifting from disjointed incentives toward a framework that lowers risk, attracts private capital, and enables firms to scale efficiently.
Agriculture & Rural Infrastructure: Productivity the key
Sustainable rural growth depends on productivity enhancement and efficiency investment rather than short-term support either in terms of tax cuts or direct transfer. Emphasis on irrigation, water management, cold chains, storage, and agriculture processing infrastructure is a priority. These directly raise farm productivity, reduce post-harvest losses, and improve rural incomes while indirectly creating non-farm employment opportunities.
Improved rural infrastructure also strengthens supply chain linkages between farmers, \processors, and markets, supporting price realisation and export potential. A budgetary focus on agriculture infrastructure would signal a shift toward long-term rural income diversification and security.
Health & Education: Capital Spending for Human Capital
Demographic advantage of any country depends on sustained investment in human capital. We need to prioritise capital expenditure in health and education, including hospitals, skilling centres, and higher education research infrastructure.
Capital investments create immediate employment during construction while delivering long-term productivity momentum. Industries are face growing skill mismatches and deficits, investment in vocational and technical training should be the top priority. To rebalance social sector spending toward assets that enhance capacity, quality, and access.
Digital Infrastructure & Skilling: What’s next for Growth?
Digital infrastructure has emerged as a foundational driver of modern economic activity. Expanding investment in broadband connectivity, data centres, and digital skilling would go a long way to support services-led growth and employment. Digital public infrastructure lowers entry barriers for MSMEs, and enhances productivity across sectors. Investment in youth skilling shall be juxtaposed with digital services to enhance export competitiveness. Digital investments offer high spillovers at relatively lower capital cost. To accelerate this transition last-mile connectivity and workforce readiness should be strengthened. A lucid digital and skilling strategy would help capture emerging opportunities in services exports and technology-driven growth.
Clean Energy & Green Infrastructure: Transition and Security
Clean energy investment is increasingly central to economic and strategic planning. With focus on grid modernisation, renewable integration, EV charging infrastructure, and clean-tech manufacturing will attract private capital into emerging green sectors. Duty rationalisation on critical minerals and clean-tech inputs can further strengthen domestic manufacturing capacity. Budget 2026–27 can support India’s transition to clean energy by aligning fiscal policy with long-term sustainability goals.
Affordable Housing & Urban Renewal: Jobs Where Growth Is
Housing and urban renewal remain among the most labour-intensive segments of the economy. PHDCCI argues for sustained support to affordable housing, slum redevelopment, and urban infrastructure upgrades. These investments generate immediate construction employment while stimulating demand for steel, cement, and local manufacturing. Rationalising tax and valuation norms can also help revive real estate activity and unlock stalled projects. As urbanisation accelerates, targeted renewal programmes can improve living standards, productivity, and resilience.
Budget 2026–27 provides an opportunity to align housing policy with employment generation and urban sustainability. A well-designed housing push can simultaneously address social needs and macroeconomic objectives.
