States’ capital expenditure likely rose 21% on-year in April compared with a decline of 14% in the year-ago month, despite a moderation in tax collections.
A review of the finances of 17 states by FE showed that their capex in April 2025 rose to Rs 22,711 crore compared with Rs 18,716 crore in the year-ago month.
The states include Madhya Pradesh, Andhra Pradesh, Uttar Pradesh, Maharashtra, Tamil Nadu, Gujarat, Haryana, Karnataka, Kerala, Odisha, Punjab, Rajasthan, Assam, Chhattisgarh and Jharkhand, among others.
According to the Reserve Bank of India data, all states and UTs in aggregate invested Rs 8.2 lakh crore in FY24 (including central assistance) compared with Rs 6.7 lakh crore in FY23.
For FY25, the states and UTs budget estimate for capex was Rs 10 lakh crore, which was a bit too optimistic.
The 17 states under review reported a 1.3% decline in their tax revenues in April at Rs 1.93 lakh crore compared with the 11% growth recorded in the year-ago month.
Their borrowings rose 81% on-year to Rs 68,717 crore in April 2025 as against 14% decline in the year-ago month.
These states under review reported a 8% increase in revenue expenditure in April 2025 to Rs 2.6 lakh crore compared with 11% growth seen in the year-ago month.
Lower growth in tax revenues led to a marginal increase in fiscal deficit to 3% of GSDP in FY25 compared with 2.9% in FY24 and 2.8% in FY23.
The Centre has budgeted to extend Rs 1.5 lakh crore in 50-year interest free capex loans to states in FY26 for their capital projects.