Capital expenditure by central public sector enterprises (CPSEs) from their internal and borrowed resources is projected to increase by about 12% to Rs 4.8 lakh crore in FY27, compared with an estimated Rs 4.3 lakh crore in FY26.
As in previous years, the energy sector is expected to have the highest share in the capex cycle of non-financial CPSEs, with Power Grid Corporation leading the way.
Powering the Grid
At the same time, CPSEs under the ministry of petroleum are projected to account for the largest share of the total CPSE capex in FY27, even though their aggregate investment is forecast to remain flat at around Rs 1.3 lakh crore.
Capex spends by CPSEs from their own resources have shown a distinct dip-and-recovery pattern over the past seven years. After a relatively strong investment of Rs 4.8 lakh crore in FY21, the capex moderated to Rs 4.4 lakh crore in FY22 and declined further to a low of Rs 3.6 lakh crore in FY23, reflecting the impact of post-pandemic balance sheet stress and cautious investment decisions.
The investment cycle began to turn in FY24, with CPSE capex recovering to Rs 3.9 lakh crore. This momentum strengthened in FY25, when spending rose sharply to Rs 4.9 lakh crore—the highest level in the period—signalling renewed confidence, improved internal accruals, and a revival in large infrastructure and energy-related projects.
However, this peak was followed by a pullback in FY26, with capex easing to Rs 4.3 lakh crore, suggesting a consolidation phase after the sharp expansion in the previous year. The Budget Estimates for FY27 indicate a renewed push, with CPSE capex projected to rise again to Rs 4.8 lakh crore, broadly returning to FY21 levels.
From Dip to Recovery
The robust public capex cycle is expected to generate strong multiplier effects across sectors, particularly boosting demand for steel, cement, machinery and construction services.
The government monitors CPSE and other organisations’ capex achievements (with annual capex estimates of `100 crore or more) and other government organisations—namely the Railway Board, the National Highways Authority of India, the Delhi Metro Rail Corporation, and the Damodar Valley Corporation.