The Centre’s capital expenditure on big-ticket infrastructure projects such as highways, railways, power development, and investments in critical sectors like defence is expected to propel India’s economic growth in the financial year 2025-26 and beyond, according to a report by financial services firm Prabhudas Lilladher (PL).
“We are already witnessing an uptick in momentum in railways, defence, power, data centres, etc., the execution of which will accelerate growth in FY26 and beyond,” the report stated.
The government allocated a massive Rs 11.1 lakh crore for infrastructure projects in the budget for 2024-25, and this figure is expected to be further increased in the forthcoming budget for 2025-26.
The anticipated measures to pump-prime the economy could provide the much-needed push to stimulate demand and support long-term growth, the report noted.
The report emphasized that the forthcoming budget will be instrumental in shaping economic recovery, with expectations of a growth-driven focus aimed at boosting middle-class spending, especially with inflation easing.
Additionally, sectors such as healthcare, tourism, discretionary consumption, and financialisation are poised to benefit from the economic recovery, according to the report.
The report’s observations on economic revival are supported by the surge in industrial growth, which touched a six-month high of 5.2 per cent in November, up from 3.5 per cent in October of the current financial year (2024-25), according to data released by the Ministry of Statistics on Friday.
This increase also marks a significant rise compared to the industrial growth of 2.5 per cent recorded a year earlier, in November 2023.
The manufacturing sector, which accounts for more than three-fourths of the Index of Industrial Production (IIP), saw its growth rate accelerate to 5.8 per cent in November 2024, up from 4.1 per cent in October. This development bodes well for employment generation, as the sector plays a key role in providing quality jobs to young graduates from the country’s engineering institutes and universities.
Figures on use-based classification show that the production of capital goods, which include machines used in factories, rose by a robust 9 per cent. This segment reflects real investment activity in the economy, which has a multiplier effect on job creation and income growth.
There was also a double-digit surge of 13.1 per cent in the production of consumer durables such as electronic goods, refrigerators, and TVs during November 2024, reflecting higher consumer demand amid rising incomes.
(Inputs from IANS)