Archive · 5 Oct 2026
Indian States’ Capex-GDP Ratio Nears Decade High
Indian states are spending more money on things like infrastructure and other long-term assets.
Together, their spending reached about 3% of the country’s GDP in FY25.
India Ratings expects it to have stayed near that level in FY26.
A central government programme called SASCI helps states pay for capital projects, and Rs 1.85 lakh crore has been allocated through it for FY27.
Some states spent a larger share of their economic output on capital projects than others.
States also got better at using the money they had budgeted.
In FY21, they spent about 71% of their planned capital budget, compared with more than 90% in FY25 estimates.
An Ind-Ra director expects the pace of asset creation to continue in FY27.
States’ combined capital expenditure reached 3.0% of GDP in FY25, according to revised estimates.
India Ratings expects the ratio to have stayed around 3% in FY26, near the prior peak of 3.3% in FY17.
The central government’s SASCI scheme has helped states fund capital investment; FY27’s allocation is Rs 1.85 lakh crore.
Bihar, Jharkhand, Madhya Pradesh, Assam, Uttar Pradesh, Goa and Odisha recorded capex ratios of 4% or more during FY22-FY25.
Capex utilisation rose from 70.7% in FY21 to above 90% in FY25 revised estimates, with improvement expected to continue.
- Who
- Indian state governments, with analysis and estimates from India Ratings (Ind-Ra).
- What
- States’ aggregate capital expenditure reached 3.0% of GDP in FY25, and was expected to remain around 3% in FY26.
- When
- The figures cover FY17 and FY21-FY27, with state comparisons for FY22-FY25.
- Where
- Across India, with state-level differences.
- Why
- The rise reflects post-pandemic normalisation and assistance through SASCI, alongside states’ own capital spending.
Higher-capex states
Lower-capex states
Differences in state investment
Higher-capex states
Bihar, Jharkhand, Madhya Pradesh, Assam, Uttar Pradesh, Goa and Odisha recorded capex ratios of 4% or above during FY22-FY25, exceeding the all-states average of 2.6%.
Lower-capex states
Maharashtra, Tamil Nadu, Rajasthan, Andhra Pradesh, West Bengal and Kerala reported lower capex intensity; the article attributes differences to fiscal flexibility, spending priorities, committed obligations and infrastructure needs.
- Aggregate capex, FY25
- 3.0% of GDP, based on revised estimates
- FY26 estimate
- Around 3% of GDP, according to India Ratings
- Previous peak
- 3.3% of GDP in FY17
- FY27 SASCI allocation
- Rs 1.85 lakh crore for state governments
- High-capex states
- Bihar, Jharkhand, Madhya Pradesh, Assam, Uttar Pradesh, Goa and Odisha recorded ratios of 4% or above during FY22-FY25
- Capex utilisation
- 70.7% in FY21, rising to above 90% in FY25 revised estimates