In an interaction with CNBC-TV18, senior CII leaders outlined what they expect—and want to see—in the Budget.
Vinayak Chatterjee, Chairman of the CII Panel on Infrastructure PPP and Co-Founder of The Infravision Foundation, said infrastructure spending by the Centre is likely to rise sharply in the coming fiscal, while Piruz Khambatta, Chairman of the CII Panel on Taxation and Group Chairman of Rasna, stressed the need for fuel tax rationalisation and pro-manufacturing measures to boost demand and growth.
₹14 lakh crore infra outlay likely in Budget
Chatterjee said there is now a broad national consensus that India needs to spend around 7% of its GDP on infrastructure to sustain long-term growth. Historically, he noted, roughly half of this—about 3.5% of GDP—comes from the Union Budget, with the rest funded by states, public sector enterprises outside the Budget, and private investment.
“With nominal GDP next year expected to be around ₹400 lakh crore, 3.5% works out to about ₹14 lakh crore,” Chatterjee said. “That is the kind of infrastructure outlay I am expecting from this Budget.”
This would imply a jump of around 27% from the ₹11 lakh crore allocated for infrastructure in the previous Budget, underlining the government’s continued reliance on capex as a growth driver amid global uncertainty and uneven domestic demand.
PPP back in focus as government readies ₹17 lakh crore pipeline
Public-private partnerships (PPP) are set to be a central pillar of the government’s infrastructure strategy, Chatterjee said, pointing to the Finance Ministry’s recent announcement of a PPP pipeline comprising 283 projects worth ₹17 lakh crore to be implemented over the next three years.
“The fact that this has been announced even before the Budget shows how high PPP is on the government’s priority list,” he said, adding that the ministry is actively working through a fresh slate of projects across sectors.
A renewed PPP push is seen as critical to crowd in private capital, reduce pressure on public finances, and accelerate execution in large infrastructure projects.
Pension funds as next big source of infra capital
Chatterjee also flagged a potential structural reform that could significantly expand long-term funding for infrastructure—allowing pension funds to invest directly in the sector.
“Pension funds today manage assets of over ₹16 lakh crore, but they are not allowed to invest directly in infrastructure,” he said. Opening this avenue would provide patient capital for long-gestation projects and help address the asset-liability mismatch that arises when commercial banks finance long-term infrastructure assets.
Railways may steal the spotlight from roads
While India has made substantial progress in roads and highways over the past two decades, Chatterjee suggested the next phase of infrastructure spending could see a shift in sectoral emphasis.
“The roads and highways sector has reached a certain level of maturity, with increasing private participation through InvITs and hybrid annuity models,” he said. “My sense is that this time the focus may move towards railways.”
Within railways, Chatterjee expects a series of announcements, potentially including new-generation high-speed rail corridors, signalling a renewed thrust on rail infrastructure as an enabler of manufacturing and logistics efficiency.
CII bats for fuel tax relief to support consumption
On the consumption side, Piruz Khambatta said high fuel taxes are hurting both households and industry, and merit serious reconsideration.
“I believe there is merit in either bringing fuel under the ambit of GST or reducing taxes on fuel,” Khambatta said, noting that fuel is a major input cost for manufacturing and processing industries. In sectors such as food processing, he explained, energy and fuel costs are often the second-largest expense after raw materials.
Khambatta argued that the government and states now recognise the need for coordinated reforms, citing past consensus on labour reforms despite India’s federal structure.
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‘Budget must be truly pro-manufacturing’
Beyond fuel taxes, Khambatta said the Budget should clearly prioritise manufacturing by incentivising fresh investment, technology adoption, and research and development.
“A pro-manufacturing Budget is one that gives benefits for putting more money into new machinery, incentivises new technology, builds R&D infrastructure, and reduces taxes to ensure competitiveness in India and abroad,” he said.
He added that boosting consumption and manufacturing go hand in hand. “We need to put more money in people’s hands so they buy more. If people buy more, the overall economy grows.”
Balancing capex and consumption
Together, the views from CII underline the delicate balancing act facing the government in Budget 2026—maintaining a strong capex-led growth strategy while addressing consumption pressures through tax rationalisation and manufacturing support.
If the government delivers on higher infrastructure spending, a renewed PPP push, and selective tax relief to revive demand, it could help reinforce growth momentum at a time when global headwinds remain a key risk.
