States’ capital expenditure showed a clear acceleration in April–December of the current financial year after a relatively flat phase last year.
Aggregate capex 19 states moderated from about Rs 4.1 lakh crore in FY24 (Apr–Dec) to Rs 4 lakh crore in FY25, a 3% decrease. In FY26, however, it jumped sharply to roughly Rs 4.62 lakh crore — a strong about 16% year-on-year rise, signalling a renewed push on public investment.
The trend suggests a revival in project execution and infrastructure spending in FY26. The recovery is not uniform, though. Large industrial states are driving the upswing. Madhya Pradesh, Gujarat, Maharashtra and Telangana show substantial increases, with double-digit to very high growth rates.
Andhra Pradesh stands out with an exceptional rebound, more than doubling its capex over FY25 levels, indicating either delayed projects catching up or a major investment cycle underway.
Notable Regional Contractions
In contrast, some states show compression. Uttar Pradesh — despite remaining one of the biggest spenders in absolute terms — records a notable decline. West Bengal, Himachal Pradesh, Punjab and Chhattisgarh also post double-digit contractions, pointing to fiscal constraints or project timing shifts.
Overall, the data reflect a broad-based but uneven capex recovery, with growth concentrated in a cluster of high-investment states rather than evenly spread across the federation.
In contrast, revenue expenditure growth slowed markedly to 8% from a very high 24% a year earlier. The moderation indicates better expenditure control after the post-pandemic and election-linked spending spike seen earlier, helping create fiscal space for capex.
Shifting Receipt Trends
On the receipts side, tax revenue growth eased to 9% from 14%, reflecting softer economic momentum or base effects. Despite this, states increased borrowings and liabilities growth to 15%, up from 11%, likely to finance the capex push.
Overall, the pattern reflects improving expenditure quality, with states rebalancing budgets toward asset creation even amid moderating revenue growth.
The 19 states reviewed are— Bihar, Telangana, Gujarat, Andhra Pradesh, Assam, Uttar Pradesh, Maharashtra, Madhya Pradesh, Odisha, West Bengal, Tamil Nadu, Haryana, Karnataka, Kerala, Telangana, Punjab, Chhattisgarh, Jharkhand and Himachal Pradesh.
Public capex—by centre, states and CPSEs—is key to India’s gross fixed capital formation in recent years in the absence of strong private capex.