States have utilised just over half of their combined capital expenditure (capex) budgets in the first 10 months of FY25–26, pointing to a slower pace of public investment at the sub-national level compared with the Union government.
An analysis of monthly accounts for 23 states released by comptroller and auditor general of India (CAG) shows that between April and January, states spent only 51.84% of their total budgeted capex of ₹10.37 lakh crore. In absolute terms, this amounts to about ₹5.38 lakh crore.
Of the 23 states, 12 have utilised less than half of their annual capital outlay. Major states, including Maharashtra, Karnataka, Punjab and Uttar Pradesh, are among those yet to cross the 50% mark.
At the other end, Telangana has emerged as a clear outlier, already exceeding its full-year capex target with utilisation of 121.56%. Haryana followed with 92.75%, while Kerala and Bihar recorded 82.09% and 80.19% utilisation, respectively.
Several states, however, showed weak progress. According to CAG, West Bengal has spent just 29.06% of its annual capex allocation, while Tripura has utilised 29.46%. Other laggards include Chhattisgarh at 31.01%, Meghalaya at 34%, Uttar Pradesh at 36.53% and Rajasthan at 38.47%.
The slower pace of state spending contrasts with the Union government’s performance. Data from the controller general of accounts (CGA) shows that the Union government had already achieved 76.9% of its revised estimate for capital expenditure during the same period.
The trend also marks a slowdown compared to the previous financial year. In FY24–25, 25 states had collectively utilised 80.2% of their capex budgets by year-end, spending about ₹7.8 lakh crore out of ₹9.7 lakh crore.
While capital spending has lagged, revenue expenditure has progressed more steadily. The 23 states spent 68.22% of their combined revenue expenditure budget of ₹51 lakh crore between April and January.
Among states, Bihar recorded the highest utilisation at 82.9%, followed by Himachal Pradesh at 81.8%, Tamil Nadu at 77.1% and Andhra Pradesh at 76.95%. Lower utilisation was seen in Jharkhand at 56.74%, Maharashtra at 57.25% and Tripura at 57.69%, the CAG data shows.
On the revenue front, states have collected about 73% of their budgeted tax revenue of ₹38.1 lakh crore during the period. Haryana leads with collections at 80.8% of its annual target, followed by Assam at 80.1% and Gujarat at 79%. Among weaker performers are Uttar Pradesh, Bihar, Rajasthan and Nagaland.
States have also crossed the halfway mark in borrowings, raising about ₹8 lakh crore—61.2% of their full-year borrowing target of ₹13.1 lakh crore.
According to India Ratings & Research, the overall capex effort by states is still expected to remain significant. Anuradha Basumatari, a director at the agency, estimates that states will achieve a combined capex-to-GDP ratio of about 2.7% in FY25-26, rising to around 2.9% in FY26-27.
However, the current trend suggests that a substantial portion of capital spending may be pushed to the final months of the financial year—a recurring pattern that raises concerns about the efficiency and quality of public investment.
The data underscores a persistent challenge: while states continue to raise revenues and borrow funds, translating these into timely capex remains uneven across regions.
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