New Delhi [India], January 12 : The Union government's efforts on infrastructure development and investments in critical sectors such as railways, defence, power, and data centres are expected to drive growth momentum into the financial year (FY) 2026 and beyond, says a report by financial services firm Prabhudas Lilladher (PL).
According to the report, the foundations for a gradual economic recovery appear to be taking shape due to the government stepping up efforts to accelerate capital expenditure (capex) spending.
The total capital spending by the Centre was budgeted at Rs 11.1 trillion for FY25.
The report further said that the early signs of increased order activity in these areas highlight the potential for accelerated execution, which could act as a catalyst for broader economic revival.
"With food inflation having peaked out at 10.9 per cent in Oct and Govt trying to accelerate capex spending, we expect gradual economic recovery to set in. we are already witnessing uptick in ordering momentum in Railways, Defense, Power, Data centers etc. the execution of which will accelerate growth in FY26 and beyond," the report said.
It added that the upcoming Budget will be instrumental in shaping this recovery, with expectations of a growth-driven focus aimed at boosting middle-class spending and balancing fiscal discipline.
According to the report, while revenue collection may fall short of targets, the anticipated measures to pump-prime the economy could provide the much-needed push to stimulate demand and support long-term growth.
As per the report, for investors, the recent evolving landscape offers attractive opportunities across several structural themes.
The India capex story, encompassing capital goods, infrastructure, and emerging technologies, stands out as a major growth driver.
Additionally, sectors such as healthcare, tourism, discretionary consumption, and financialization are poised to benefit from the recovery, the report added.
"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.
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