All eyes are on the upcoming Union Budget for 2026. Finance Minister Nirmala Sitharaman will present this major policy document on Sunday, February 1. This will be her ninth budget presentation. The government is expected to maintain its focus on accelerating India's economic growth while exercising fiscal prudence.
Infrastructure Sector Set for a Boost
In this context, analysts predict the Centre will significantly increase spending on the infrastructure sector. This move aims to boost overall growth, generate employment opportunities, and further the goal of an "Atmanirbhar Bharat" or self-reliant India. As expectations for a strong infrastructure push grow, expert sentiment towards the sector is turning more positive.
Sreeram Ramdas, Vice President at Green Portfolio PMS, shared his perspective. "A Budget that sustains infrastructure capex, strengthens export support and enhances sector-specific competitiveness will both bolster domestic growth and signal confidence to investors," he said.
Will the Budget Increase Infrastructure Outlay?
Experts widely believe the government will announce an increase in infrastructure spending in Budget 2026. Radhika Rao, Senior Economist and Executive Director at DBS Bank, provided details. She stated the Budget will likely announce higher capital expenditure outlays for infrastructure. This includes railways, roads, highways, defence, and transfers to states. Collectively, these areas represent around 80% of effective government capex.
Sujan Hajra, Chief Economist and Executive Director at Anand Rathi Group, offered a nuanced view. He believes that while overall capital expenditure should remain strong, its distribution is likely to change. "While geopolitical risks persist, we expect the growth in defence outlays to moderate. This does not mean defence spending will decline, but its growth rate could slow. As a result, sectors such as energy and other infrastructure segments could see relatively higher increases in allocation," Hajra explained.
Sustained Investment Yielding Results
Ajitabh Bharti, co-founder and executive director of CapitalXB, highlighted the impact of past investments. He underscored that over the past few years, sustained public investment in highways, railways, logistics corridors, and urban infrastructure has materially improved connectivity. It has also reduced friction across supply chains.
Bharti said the government may further increase the outlay for the infrastructure sector in the Budget. He expects a continued focus on transport, logistics, and urban assets. "Alongside physical infrastructure, sharper attention to digital public platforms, institutional capability, and human capital will be critical to improving productivity and supporting long-term, sustainable growth—particularly for MSMEs that remain central to economic activity," Bharti added.
Infrastructure Stocks to Consider
Experts appear upbeat about the infrastructure sector's prospects. They suggest investors pick stocks with strong fundamentals from within the sector. Broking firm Ventura identified several companies for consideration. Their list includes Hindustan Construction Company (HCC), GMR Airports, Kalpataru Projects International, Larsen and Toubro, and Dilip Buildcon.
Ajit Mishra, SVP of Research at Religare Broking, shared specific recommendations. From the cement space, he recommends Ultratech and Dalmia Bharat. From the power EPC segment, he suggests KEC International. Mishra is also positive on Power Grid from the power transmission segment and NCC from the broader infrastructure space.
Please note: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
