Revival of Capital Expenditure: Infrastructure Growth on the Horizon

Capital Expenditure is poised for a comeback as expanding order pipelines buoy the Engineering and Construction (E&C) sectors amid challenging market slowdowns. A recent report by SMIFS Limited highlights the cautious recovery, attributing tempered progress to lingering higher base effects in these sectors.

Following years of robust tendering, India's key infrastructure sectors are experiencing slowed awarding activities in fiscal years 2024 and 2025. Contributing factors include cost and time overruns, heightened expenditure on welfare initiatives, and election-induced disruptions. However, a diversified approach in geography, sectors, and clientele is deemed essential for long-term growth.

Over the past decade, India's infrastructure landscape has significantly improved due to government initiatives aimed at modernization. Notable budgetary enhancements reflect this momentum, with major investments in roads, railways, defence, and telecommunications sectors highlighted. Capital Expenditure, as a share of the overall budget, now commands a higher priority, reinforcing the focus on asset creation and economic stimulation as the nation progresses.

(With inputs from agencies.)