India's Economic Revival Through Infrastructure Development

NEW DELHI: The Union government's strategic focus on infrastructure development and investments in pivotal sectors such as railways, defence, power, and data centres is poised to sustain growth momentum well into the financial year (FY) 2026 and beyond, according to a report by financial services firm Prabhudas Lilladher (PL).

The report highlights that the government's efforts to accelerate capital expenditure (capex) spending are laying the groundwork for a gradual economic recovery. With a budgeted capital spending of Rs 11.1 trillion for FY25, the early signs of increased order activity in these sectors underscore the potential for accelerated execution, which could serve as a catalyst for a broader economic revival.

Expectations for the Upcoming Budget

The upcoming Budget is anticipated to play a crucial role in shaping this recovery, with a focus on growth-driven initiatives aimed at boosting middle-class spending while maintaining fiscal discipline. Despite potential shortfalls in revenue collection, the expected measures to stimulate the economy could provide the necessary impetus to invigorate demand and support long-term growth.

Investment Opportunities in Emerging Sectors

For investors, the evolving landscape presents attractive opportunities across several structural themes. The India capex story, encompassing capital goods, infrastructure, and emerging technologies, is identified as a major growth driver. Additionally, sectors such as healthcare, tourism, discretionary consumption, and financialization are expected to benefit from the recovery.

"We believe India Capex story (Capital Goods, Infra, Ports, EMS, New Energy, Data centers, Railways, Defense), Healthcare (Hospitals, Pharma), Tourism (Aviation, Hotels, Accessories), Discretionary consumption (E-com, Jewellery, Food Services, Retail), Financialization (Capital market entities, Digital Public Infra) are some of the key themes to play for long term gains," the report added.