R Shankar Raman, the Chief Financial Officer of engineering giant Larsen & Toubro (L&T), has expressed optimism for continued strong government spending on infrastructure, predicting a 10 per cent increase in capital expenditure allocation in the upcoming Union Budget for the financial year 2026-27 (FY27).
Confidence in Government's Infrastructure Push
In a recent interaction, Raman highlighted the government's substantial ₹11 lakh crore commitment for capital expenditure in the FY26 budget as a strong foundation. He believes Finance Minister Nirmala Sitharaman's upcoming budget will follow the same trajectory, crucial for India's ambition to become a developed economy by 2047. "Infrastructure has a lot of role to play, and I think the government is seized of this," Raman stated.
Addressing concerns that high public spending might crowd out private investment, Raman dismissed such fears. He pointed to the ample liquidity in the financial system as a factor that can support both government and private investments simultaneously.
Execution Hurdles and Manpower Challenges
While bullish on the pipeline of large projects, Raman identified key bottlenecks. He noted that awarding projects solely to the lowest bidder, who may lack technical expertise, often leads to execution delays. He welcomed the government's recommendation for a qualitative-based pricing mechanism, which considers timely completion alongside cost.
On the manpower front, Raman confirmed that shortages in skilled labour persist for the construction sector. He attributed this to the availability of alternative work and schemes like MGNREGA, which provide employment near home. The pandemic-induced shift in mindset, where workers prioritize staying closer to their families, has further exacerbated this trend.
"The best antidote would be to take projects closer to their places of residency, which means you will have to go deeper into the country," the CFO suggested, aligning this with the government's broader infrastructure dispersal strategy.
Private Capex and Policy Engagement
On private investment, Raman observed a positive trend with companies in sectors like automobile, steel, metals, semiconductors, and electronics actively expanding capacity. He also praised the government's consultative approach during the budget-making process, engaging with industry stakeholders, which he termed a sign of a mature governance system.
Raman's comments underscore a business leader's confidence in India's public investment-led growth model while pragmatically highlighting the operational challenges that need addressing to ensure timely project delivery and sustainable development.
