Driving India’s Growth through Capex Investments with Fiscal Discipline: OmniScience Capital
OmniScience Capital has released its budget outlook for 2026 in a report titled "Driving India’s Growth through Capex Investments with Fiscal Discipline". The report estimates ~Rs 53.5 trillion budget with 15% capex growth & 4.2% fiscal deficit for FY27.The report highlights that India’s Union Budget has undergone a clear structural transformation over the past decade, with capital expenditure (capex) emerging as the centrepiece of fiscal policy. From FY16, when capex accounted for roughly 20% of total budgetary spending, its share has risen steadily to over 30.6% in FY26, signalling a decisive shift towards asset creation and long-term growth.
While the overall size of the Union Budget has expanded at a healthy pace, the report notes that the composition of expenditure growth is the key differentiator. Capital expenditure has grown at close to a 15% CAGR over the past ten years, materially outpacing revenue expenditure growth which grew at 8.8%. This reflects a sustained policy focus on infrastructure development, productivity enhancement, and crowding-in of private investment, rather than consumption-led fiscal expansion.
On the receipts front, tax revenues are projected to grow at ~10% YoY in FY27, broadly aligned with historical trends and a nominal GDP growth assumption of ~9%. Non-tax revenues are also expected to grow at ~10%, reflecting normalised dividend payouts and steady CPSE profitability, without assuming exceptional transfers from the RBI. Borrowings are projected to rise modestly at ~3% YoY, implying a FY27 fiscal deficit of ~4.1–4.2% of GDP, consistent with the ongoing consolidation path.
On the expenditure side, capex remains the central fiscal lever, with direct capital spending maintained at elevated levels. Including grants for capital assets, total public capex is estimated at ~?17 lakh crore in FY27, reinforcing the infrastructure-led growth strategy.At the aggregate level, budgetary allocations continue to reflect continuity in fiscal priorities, with defence and core infrastructure remaining dominant spending heads. However, the report observes a gradual rebalancing towards technology, energy, and urbanisation, even as interest payments remain a structural constraint on revenue-side flexibility.
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