Archive · 19 Sep 2026
States Urged to Raise Capital Outlay to 3% by FY32
India wants to become a developed country by 2047.
Government officials said state governments need to spend more on long-term projects such as infrastructure.
They suggested that states raise this spending to about 3% of their economic output by 2031-32.
States currently plan to spend about 2.4% of their economic output on these projects.
Officials said government budgets alone will not provide enough money for the country’s goals.
They recommended attracting private investment through partnerships, asset sales and better use of land.
States also have different levels of tax revenue, debt and access to credit.
Officials said reforms could help states raise more money and spend it more effectively.
States were urged to increase capital outlay to about 3% of GSDP, or 20% of budget resources, by 2031-32.
States have budgeted approximately ₹11 trillion in capital outlay, equal to about 2.4% of GSDP and 16% of budget resources.
Revenue Secretary Arvind Shrivastava said states will be central to infrastructure, public services and productive activity under Viksit Bharat.
Officials called for greater private-sector financing through public-private partnerships, asset recycling and wider investment by state economies.
The presentation highlighted fiscal disparities among states and urged reforms to improve revenue, spending quality and local-government capacity.
- Who
- Revenue Secretary Arvind Shrivastava, Economic Affairs Secretary Anuradha Thakur, Union Finance Minister Nirmala Sitharaman and state government representatives.
- What
- Officials urged states to raise capital outlay and mobilize more public and private financing to support India’s development goals.
- When
- The recommendations were presented on Friday at a two-day conference; the target year for higher capital outlay is 2031-32.
- Where
- At the Union finance ministry’s conference of state finance ministers and finance secretaries in New Delhi.
- Why
- To strengthen productive capacity and support India’s goal of becoming a developed economy by 2047.
- Recommended capital outlay
- Around 3% of GSDP, or 20% of state budget resources, by 2031-32.
- Current state capital outlay
- Approximately ₹11 trillion, equal to about 2.4% of GSDP and 16% of budget resources.
- State spending
- States are expected to spend about ₹64 trillion in the current year, compared with roughly ₹55 trillion by the central government.
- Public-private partnerships
- The Department of Economic Affairs database contains more than 1,800 PPP projects estimated at ₹25 trillion.
- State fiscal disparities
- Own tax revenue per capita ranges from ₹5,000 to ₹38,000, while outstanding liabilities range from about 19% to 46% of GSDP.
- Potential investment areas
- Renewable energy, energy storage, critical minerals, artificial intelligence, data centres, tourism, agriculture value chains and the circular economy.