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Public capex spurs private investment, boosts capital formation to 34% of GDP in Q1: Sitharaman
Sep-23-2026

Finance Minister Nirmala Sitharaman has said that public capital expenditure (capex) in India has successfully crowded in private investment, and the impact now reflected in higher capital formation, improved manufacturing capacity utilisation and stronger bank credit to industry. The government has increased capital expenditure to more than Rs 12 lakh crore in 2026-27, while actual capital expenditure-- including central grants to states for creating capital assets-- has exceeded Rs 17 lakh crore.  

The minister said crowding-in is now visible with gross fixed capital formation rising to over 34 per cent of GDP in the first quarter of 2026-27 (Q1FY27) and registering around 12 per cent growth in real terms. Manufacturing capacity utilisation has also increased to 75 per cent. This operational velocity has been unlocked by resolving the twin balance sheet crisis. India now operates with a 'twin balance sheet advantage' under which commercial banks have the liquidity to lend while corporations have the solvency to invest. Bank credit growth to industry also accelerated, rising 19 per cent year-on-year in June 2026. 

She said credit is reaching those who need it, and the government's free trade agreements (FTAs) are creating greater market access for labour-intensive goods and services. She urged the commercial sector to capitalise on these opportunities. She also highlighted improvements in India's infrastructure and logistics ecosystem, saying the country's execution tempo had helped dismantle the earlier perception of chronic administrative delays. Average turnaround time at major ports has nearly halved over the past decade, while the rail network is now almost fully electrified. Rail freight loading has also reached a record 1,670 million tonnes. 


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