Blitz Bureau
NEW DELHI: ACROSS democracies – and particularly in India – capital expenditure has emerged as the least controversial and the most electorally defensible form of economic politics. Roads, railways, ports and power lines no longer belong solely to the domain of planners and technocrats; they have become centre-stage political instruments, carefully calibrated to deliver growth, visibility and voter reassurance without triggering fiscal alarm bells. In this regard, Finance Minister Nirmala Sitharaman announcement in her Union Budget 2026-27 speech that public capital expenditure will be Rs 12.2 lakh crore is highly significant. The allocation is roughly Rs 1 lakh crore higher than the previous year’s.
The attraction to hike capex is straightforward. Infrastructure spending satisfies three political imperatives at once. It signals action, promises jobs and growth, and avoids the moral hazard debates that accompany subsidies or cash transfers. Unlike welfare handouts, capital expenditure carries the aura of prudence. It can be framed not as consumption, but as investment – money spent today to secure prosperity for tomorrow.
In the case of India, this shift has been particularly pronounced. Over the past decade, successive Budgets have prioritised public capital expenditure even amid global shocks, pandemic aftershocks and electoral cycles. The political logic is clear: infrastructure offers tangible proof of governance. A highway, a railway station or an airport terminal is visible, photographable and geographically anchored – qualities that no abstract reform, however significant, or fiscal metric can ever match.
Crucially, infra spending allows governments to sidestep ideological fault lines
Crucially, infrastructure spending also allows governments to sidestep ideological fault lines. Market purists tend to tolerate it because it crowds in private investment and lowers transaction costs. Welfare advocates accept it because it generates employment and regional development. Even fiscal conservatives are disarmed by the argument that capex strengthens the economy’s productive capacity rather than bloating recurrent expenditure.
There is also a deeper political economy at play. In an era of voter anxiety – marked by job insecurity, inflation fears and global uncertainty – governments are rewarded less for efficiency and more for reassurance. Infrastructure projects offer the comfort of permanence. They suggest the capacity of the state, its long-term intent and control in an otherwise volatile world. For voters, this matters as much as immediate economic outcomes.
Another reason infrastructure has become politically ‘safe’ is its ability to be centralised. Large capital projects strengthen the role of the Union Government in fiscal coordination, project execution and credit allocation. This consolidates political authority while allowing states to share credit without fully bearing the fiscal burden. The politics of cooperative federalism often plays out most smoothly on concrete and steel.
Yet this comfort with capex is not without risks. The very first risk is complacency. Infrastructure spending, while necessary, is not a substitute for structural reform. Roads cannot compensate indefinitely for rigid labour markets, weak urban governance or low human capital investment. There is also the danger of diminishing returns: once the low-hanging fruit is built, each additional rupee delivers less political and economic payoff. The second risk lies in execution. Delays, cost overruns and land acquisition challenges can quickly turn a political asset into a liability. Poorly prioritised projects may inflate headline capex numbers without meaningfully improving productivity or employment. The need of the hour is to focus on harder reforms such as judicial efficiency, regulatory simplification, education and health.