- What Investors Should Know?
- Final Take
Every Union Budget is basically a map of the government’s priorities for the next year. When the government decides to build more roads, buy more trains, or fund more housing, that money usually flows into projects, contracts, and supplies across the economy.
One big thing stands out in Budget 2026-27: the government’s total spending is estimated at ₹53,47,315 crore, and capital expenditure (capex) is budgeted at ₹12,21,821 crore. Capex means money spent on building long-life assets like roads, rail, power systems, and public infrastructure.
In this blog, you will learn which sectors look most supported by Budget 2026-27 spending, and what the key numbers mean for a normal retail investor.
Railways: Modernisation and track work
Railways remain a high-visibility capex area in 2026-27 among the top ministries by allocation.
Within Railways, three spending buckets matter for listed companies. Rolling stock is budgeted at about ₹52,109 crore, which links to locomotives, wagons, and coaches. Track renewals are budgeted at ₹22,853 crore, which links to rails, sleepers, and safety upgrades.
For a retail investor, the key idea is simple: rail spending usually creates multi-quarter order flows. It is not just “one quarter of sales”, but longer execution cycles for manufacturers and EPC (engineering, procurement, construction) contractors, which are companies that build projects end-to-end.
Notable Companies in the Space: Titagarh Rail Systems, Jupiter Wagons, Texmaco Rail & Engineering, RVNL.
Roads and highways: NHAI support stays strong
Roads continue to be a major budget theme, with the Ministry of Road Transport and Highways among the highest allocation ministries in 2026-27.
Two numbers explain why the sector matters. Budgetary support for NHAI investment is ₹1,87,293 crore, and spending on road works is pegged at about ₹1,21,999 crore. NHAI is the National Highways Authority of India, which finances and executes national highway projects.
Highways are a supply chain. Contractors get projects, and large quantities of cement, steel, aggregates, and bitumen get consumed steadily while projects are executed.
Notable Companies in the Space: KNR Constructions, PNC Infratech, H.G. Infra Engineering, Dilip Buildcon, IRB Infrastructure.
Defence: Big-ticket procurement focus
Defence is the single largest ministry allocation in 2026-27, and capital outlay for defence services is budgeted at ₹2,19,306 crore. Capital outlay here means money meant for buying equipment and building capabilities, not day-to-day running costs.
Within that, the “what” matters as much as the “how much”. Aircraft and aero engines are earmarked at about ₹63,734 crore, and naval fleet allocation is about ₹25,024 crore, signalling continued procurement and modernisation.
The defence spending often benefits a wider ecosystem than people think: not only final assemblers, but also electronics, precision engineering, component makers, and maintenance supply chains.
Notable Companies in the Space: HAL, Bharat Electronics, Bharat Dynamics, Mazagon Dock Shipbuilders, Cochin Shipyard, Data Patterns, Astra Microwave.
Green energy: Rooftop solar gets a push
Green energy stands out because it targets mass adoption, not only large projects. PM Surya Ghar Muft Bijli Yojana is allocated ₹22,000 crore in 2026-27, which is up from the revised estimate of ₹17,000 crore in 2025-26.
This plays a vital role because rooftop solar is a “many small orders” market. Instead of a few mega tenders, it can create demand across solar panels, inverters, cables, and also financing.
A simple way to read this as an investor: government support can reduce the end customer’s cost, which can expand adoption and keep volumes healthier for the ecosystem.
Notable Companies in the Space: Tata Power, KPI Green Energy, Premier Energies.
Water infrastructure: Jal Jeevan Mission is back in force
Water infrastructure stays important, and Jal Jeevan Mission is allocated ₹67,670 crore in 2026-27.
The revised estimate for Jal Jeevan Mission in 2025-26 was much lower than budgeted, and the 2026-27 budget brings it back to a much higher level. The water missions translate into huge demand for pipes, fittings, pumps, and last-mile civil work.
Notable Companies in the Space: Supreme Industries, Astral, Finolex Industries, Prince Pipes.
Housing: Affordable homes drive building materials
Housing and urban affairs shows a higher 2026-27 allocation, and PMAY-Rural is budgeted at ₹54,917 crore in 2026-27, while PMAY-Urban also allocated ₹18,625 crore.
Mass housing is not just a real estate story. It is also a materials story: cement, paints, tiles, pipes, wiring, and sanitaryware demand tends to rise when affordable housing execution improves.
But there is some underspending in PMAY in the previous year’s revised estimates, so watching execution and payment cycles matters as much as watching announcements.
Notable Companies in the Space: Cement (UltraTech Cement, Shree Cement); Paints (Asian Paints, Berger Paints); Tiles (Kajaria Ceramics, Somany Ceramics); Sanitaryware (Cera Sanitaryware, Hindware Home Innovation).
Power distribution: Smart meters and grid upgrades
Power sector reform at the distribution level gets a clear line item. As per the budget document, ₹18,000 crore is earmarked for the Reform Linked Distribution Scheme (RDSS) in Budget 2026, versus ₹15,671 crore in the revised estimate for FY 2025-26.
RDSS funding is linked to reducing AT&C losses. AT&C losses means power lost or unbilled across transmission and distribution, basically leakage and inefficiency in the system.
This typically links to smart metering, distribution equipment, and EPC work, but the broader point for investors is that improving discom finances can make the entire power value chain healthier over time.
Notable Companies in the Space: Genus Power Infrastructures, HPL Electric & Power.
What Investors Should Know?
The Budget tells you where public money is planned to flow, but the market reacts to execution, not just headlines. The revised estimates can differ from budget estimates in major schemes like Jal Jeevan Mission and PMAY, which is a reminder to track follow-through.
A calm checklist that helps when you read budget themes:
- Prefer sectors with multi-year project pipelines, because order books can stay visible longer.
- Track “budgeted vs revised vs actual” over time, because that shows execution quality.
- Watch working-capital intensity in EPC-heavy themes, because payments can be milestone-based.
- Remember diversification: one budget theme should not become your entire portfolio narrative.
Final Take
Budget 2026-27 keeps the focus on capex-led areas like railways, roads, defence, housing, water, and power distribution, while also pushing mass adoption themes like rooftop solar. If you read the numbers with an execution lens, you get a clearer, calmer view of which sectors may see steadier demand and longer order cycles this year.
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