Infrastructure is evolving beyond physical networks, encompassing decarbonisation, digitalisation and resilience: Economic Survey 2025-26

The report also reiterated its last year’s finding that public investment alone cannot meet India’s growing infrastructure requirements. It said that investment from private sector and long-term institutional investors is necessary to maintain growth momentum.

A major shift in India’s infrastructure investment came after the government started increasing the capital expenditure budget. Between 2018–19 (FY19) and FY22, capital expenditure increased by 92 per cent, from Rs. 3.07 lakh crore to Rs. 5.92 lakh crore. This momentum was sustained over the years, with the capital outlay further increasing to Rs. 11.21 lakh crore for FY26.

Capital expenditure, or public expenditure on infrastructure, has high multiplier effects. According to the report, for every rupee spent on creating infrastructure, GDP increases by Rs. 2.5 to Rs. 3.5.

The economic survey also said that the effectiveness of the increased capital expenditure depends on the quality of project planning, prioritisation and execution.

“Evidence from various studies suggests that time and cost overruns in large infrastructure projects are often linked to gaps in upstream project preparation, including weak feasibility assessments, incomplete Detailed Project Reports (DPRs), rigid procurement practices, and delays in dispute resolution,” said the report.

In core physical infrastructure, roads and highways, railways, civil aviation, and shipping continue to be the primary drivers of India’s infrastructure development. Over the last decade, since FY14, the total National Highway network has increased by 60 per cent, high-speed corridors (HSCs) by ten times, average annual construction by 2.3 times, and capital expenditure on roads and highways by 5.8 times.

However, in FY26, National Highway construction appears to be slowing, as out of the 10,000 km construction target, 4,938 km or almost 50% had been completed as of 31 December 2025, during the first nine months of the financial year, according to the report.

In railways, the report states that with capital expenditure increasing from Rs. 0.99 lakh crore (average during 2014–19) to Rs. 2.65 lakh crore for FY26, the commissioning of lines has more than doubled in the post-2014 period compared to the previous decade.

“Railways have also emerged as a backbone of India’s freight and energy logistics, supporting coal movement, industrial supply chains, and containerised traffic through dedicated corridors, modern terminals, and first-mile connectivity projects,” said the report.

The Economic Survey further stated that there is substantial headroom in the aviation sector, as India operates 0.11 airports per million people, which is significantly lower than the US (47.35) and China (0.39). The number of airports increased from 74 in 2014 to 164 in 2025. According to the report, Indian airports handled 412 million passengers, which is projected to increase to 665 million by FY31. The report also noted that current passenger volumes represent only a fraction of India’s potential.

For the Ports and shipping sector, the report said that there has been substantial progress in upgrading port infrastructure and mechanisation, smart port initiatives, and digital trade facilitation have improved operational efficiency across major ports, with the average container vessel turnaround time achieving near-global best standards.