**Larsen and Toubro CFO Predicts 10% Increase in Capital Expenditure for FY27**
Larsen and Toubro’s Chief Financial Officer, R Shankar Raman, has expressed optimism regarding a projected 10% rise in capital expenditure in the upcoming FY27 budget. Despite concerns over declining private capital expenditure growth, Raman believes that increased government spending will not lead to resource crowding out, thanks to the current liquidity in the market.
Raman emphasized the critical role of infrastructure in India’s ambition to become a developed economy by 2047, stating, “I am hopeful that the government will allocate adequate resources in the budget to support this vision.” He highlighted the previous commitment of over ₹11 lakh crore for capital expenditure in the FY26 budget and anticipates that the forthcoming budget, to be presented by Finance Minister Nirmala Sitharaman, will follow a similar trajectory.
He noted a significant uptick in the initiation of large infrastructure projects, asserting that “infrastructure has miles to go.” However, he raised concerns about the practice of awarding contracts to the lowest bidders, which can lead to delays due to inadequate technical capabilities. Raman advocated for a “qualitative-based pricing mechanism” that considers timely project completion and other critical factors, ensuring that competent firms secure contracts.
Addressing the ongoing manpower shortages faced by the engineering and construction sector, Raman acknowledged the challenges posed by alternative employment opportunities and the government’s commitment to providing jobs for up to 125 days. He pointed out that the pandemic has shifted public perception, making individuals hesitant to leave their hometowns for work.
To counter these challenges, Raman suggested that projects should be located closer to workers’ residences, a strategy he believes the government is already pursuing. He also noted that various sectors, including automobiles, construction equipment, steel, and electronics, are currently investing in private capital expenditure.
Raman welcomed the government’s willingness to engage with industry stakeholders during the budget-making process, viewing it as a sign of a mature governance system.
**FAQ**
*What is the expected increase in capital expenditure for FY27 according to Larsen and Toubro’s CFO?*
R Shankar Raman anticipates a 10% increase in capital expenditure in the upcoming FY27 budget.
