Government capital expenditure by the Centre, states and central public sector enterprises rose 19% year on year in April-May 2026, according to a Nuvama report. The early increase in public investment has improved expectations for stronger cement demand in FY27, as construction activity typically benefits from higher infrastructure and project spending.
The report noted that the capex trend had remained weak through FY25 and FY26. Against that backdrop, the pickup in the first two months of FY27 is being seen as an important shift, suggesting that public sector spending is beginning to recover across different layers of government.
For the cement industry, a sustained rise in government capex matters because roads, housing, urban works and other infrastructure projects tend to drive bulk demand. If the current pace of spending continues, it could provide better volume support for cement makers after a relatively subdued period linked to slower capital outlays.
The latest data does not by itself guarantee a full-year trend, but it has strengthened optimism that FY27 could see healthier demand conditions. Much will depend on whether the Centre, states and CPSEs maintain momentum in capital expenditure over the coming months.
