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State of States

Weak trends in project Core infrastructure ministries like Power, Housing & Urban State Capital Some of the other states which have have shown stronger

growth (CAGR) in capital spending in the post-pandemic
Affairs, Shipping, Railways, and Road Transport & Highways saw
completions their capital spending rising in the eleven months (Apr-Feb) of period (FY22-25) compared to pre-pandemic levels (FY15-19),
the previous fiscal on an annual basis. Ministry of Power saw its
are Maharashtra, Odisha, Rajasthan and Uttar Pradesh.
capital spend rising at a blitzkrieg pace during the reporting
The value of completed projects in 2024-25 came at a four-year period. However, Road Transport & Highways spending grew by Expenditure:
low of Rs 4.78 lakh crore as compared to Rs 9.41 lakh crore in only 1.3 per cent annually between April-February 2025 due to
the previous year. The projects completed by the government a slowdown in highway construction, which hit a seven-year
fell at a steeper pace than those by the private sector. low of around 7,000 km in 2024-25. The government prioritized Trends and
maintaining and upgrading existing roads over expanding
highway capacity, reflecting a shift towards strengthening
current infrastructure.
Value of completed projects (Rs lakh crore) Impacts
Capital expenditure of key infrastructure
ministries (Rs crore)
10.00 9.41

8.00 7.00 Ministry April- April- y-o-y%
6.55 6.61 3.58 February February
6.00 5.43 4.78 2025 2024
3.00 2.97 2.83
4.00 3.50 Ministry of Power 1031.4 13.7 7450.1
3.32 2.47 he focus on capital expenditure, while ensuring orderly
1.19 5.83 Ministry of Housing 27976.8 19652.0 42.4 T
2.00 4.17 management of government finances, has been the
3.56 3.64 & Urban Affairs
2.12 2.31 2.31 hallmark of the Central Government’s policy for driving a
0.00 Ministry of Shipping 1290.0 1145.6 12.6
2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 synchronic growth and financial stability in the economy. But
Ministry of Railways 229317.8 219030.9 4.7 for growth to be sustained, it is pivotal that states also support
Government Private Sector Overall Ministry of Road 241261.0 238074.1 1.3 the Centre’s effort in asset creation and enhance the overall
Transport & Highways productive capacity of the economy.
Source: CMIE Capex database
Department of 10823.5 13327.9 -18.8
Atomic Energy
Ministry of New & 3.3 5.8 -42.4 50-YEAR INTEREST-FREE LOANS TO STATES
Renewable Energy
Trends in capital expenditure Department of 12115.7 49214.8 -75.4 HAVE ENCOURAGED CAPITAL INVESTMENTS However, in FY25 (April-February), capital expenditure by state
by the government Telecommunications 79.4 680.3 -88.3 In view of its critical importance, the Union government has governments has slowed. Numbers indicate a 4.8 per cent
Ministry of Civil Aviation
year-on-year drop in the first eleven months of the current
Total capital expenditure 811887.0 805613.0 0.8 been incentivising the states to increase their capex through a fiscal year, suggesting a slowdown in asset creation. States are
Analysing the capex trends of the government of India based on scheme for Special Assistance to States for Capital Investment seemingly diverting their resources to fund revenue
data released by the Controller General of Accounts (CGA) show Source: CGA wherein it provided 50-years interest free capital expenditure expenditure at the cost of project implementation, potentially
that the total capital expenditure for the period April-February loans to states. In 2022-23 the provision for loans under this impacting long term infrastructure development. This also
2025 grew at a modest 0.8 per cent on an annual basis, reaching To improve the efficiency of capital expenditure, CII scheme was Rs 1 lakh crore, which was increased to Rs 1.3 follows a pattern of slowdown in capex and a pause by the
Rs 8.12 lakh crore. This accounts for 79.7 per cent of the revised recommends that the Government should maintain or increase lakh crore in 2023-24 and further to Rs 1.5 lakh crore in Centre which is largely due to general election held in the first
estimate for 2024-25, compared to 84.8 per cent in 2023-24. As a its capital spending trajectory. Furthermore, it should prioritise 2024-25 and 2025-26. The aim is to catalyze capital half of FY25 and adverse weather conditions including natural
result, there is anticipation of a slight undershooting of the revised capital projects based on the following criteria: expenditure among states and strengthen core infrastructure disasters of severe nature in some states.
capex target of Rs 10.2 lakh crore set for 2024-25. across the nation. The interest-free loans from the Centre
• Higher growth multiplier have contributed, in a major way, to helping the states increase
The pace of capital expenditure during the first half of the financial • Rate of return on capital employed their capex. JHARKHAND HAS SEEN THE HIGHEST CAGR
year 2024-25 was impacted by the national elections and the • Potential for asset monetization GROWTH OF 36 PER CENT IN CAPEX
implementation of the model code of conduct. • Time required to obtain regulatory clearances In fact, a review of the finances of 17 major states during the SPENDING BETWEEN FY22-25
last five years has shown that following the economic
• Impact on reducing of ‘Cost of Doing Business’ slowdown and the COVID-19 pandemic, state governments
According to CII’s analysis of capital sending by nine key An analysis of individual states in the post pandemic period,
infrastructure ministries, their combined expenditure declined by significantly increased their capital expenditure (Capex) over the last four years, throws up a few surprises. For
3.2 per cent to Rs 0.52 lakh crore between April-February FY25 In addition, to boost private investments in the economy, the starting in FY2022. example, Jharkhand experienced the highest cumulative
as compared to Rs 0.54 lakh crore in the corresponding period government may consider launching a cohesive and integrated compound annual growth rate (CAGR) in capital expenditure
last year. This decline was primarily due to a significant reduction in trade, investment and industrial policy. Aligning foreign trade, The state capex recorded a whopping 34.1 per cent growth in among all states, reaching 36 per cent between FY22 and FY25.
spending by Ministries such as Civil Aviation, Telecommunications, FDI, domestic investment and industrial policies will help in FY22 (April-February) after having been in the red in FY21
New & Renewable energy and Atomic Energy. leveraging the significant synergies between these sectors and (April-February). The state capex continued to grow at 14.2
thereby enhance both the consistency and efficiency of per cent in FY23 (April-February) and again to 34.2 per cent in This growth surpasses the 27 per cent CAGR observed in the
governmental initiatives, providing a more favourable FY24 (April-February). In fact, the state capex has more than state between FY15 and FY19, before the pandemic. No doubt,
MINISTRY OF POWER REPORTED A environment for investment. An independent nodal agency doubled from Rs 2.48 lakh crore in FY21 to Rs 5.11 lakh crore this has come over a low base, but a whopping rise in capex
SIGNIFICANT INCREASE IN ITS CAPITAL should be appointed under the Ministry of Finance to in FY24. This increase, along with the central government's between FY22-24, which somewhat moderated in FY25, shows
EXPENDITURE IN FY25 implement the integrated policy, as this Ministry oversees the significant capex growth during the period, acted as a key that Jharkhand has invested significantly in asset creation in the
management of central government finances driver for economic growth. post pandemic period.

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APRIL 2025
APRIL 2025