Budget 2025: Government likely to front-load capex for infrastructure, healthcare, and EV sectors

As the Union Budget 2025 approaches, sources have revealed that the government plans to front-load capital expenditure (capex) with a sharp focus on infrastructure development, healthcare, and the electric vehicle (EV) sector. The government’s strategy hinges on the belief that such investment will generate employment opportunities and, in turn, boost consumption.

The budget is expected to channel significant resources into infrastructure projects such as road and highway construction and railway track expansion.

The healthcare and education sectors are also poised to receive enhanced funding, with a focus on upgrading primary and secondary schools and colleges, as well as creating and expanding AIIMS and health clinics.
Sri Charan Lakkaraju, Founder & CEO, Student Tribe, says, “With GenZ representing 377 million individuals and influencing $860 billion in consumer spending, the country is on the brink of transformative demographic and economic shifts … Over the next decade, half of GenZ will enter the labour force, with their economic influence expected to exceed $2 trillion in consumer spending. To tackle the pressing issue of insufficient education, expanding the number of schools, colleges, and universities is crucial.” 

In the EV and technology domains, the budget is likely to focus on developing battery charging stations to support the growing EV ecosystem, building AI infrastructure to position India as a global leader in artificial intelligence, and expanding the country’s semiconductor manufacturing capacity.

Shamsher Dewan, Senior Vice President and Group Head, Corporate Ratings, ICRA Limited, said, “ICRA expects the Union Budget 2025-26 to focus on measures fostering growth, innovation and sustainability. Thrust on infrastructure spending, rural output and job creation shall continue to be key focus areas. This apart, proposals around skill development, rationalisation of tax rates and policy measures promoting the ecosystem of alternative fuels, vehicle scrappage, and parts localisation shall aid the broader automotive sector.”

Pratik Kamdar, CEO and Co-founder Neuron Energy, added: “While the 5% GST on EVs has fostered adoption, achieving GST parity for EV batteries could further reduce production costs and make EVs more accessible. Enhancing the FAME II scheme with extended timelines and increased incentives will catalyse widespread adoption across various vehicle categories.”