Gujarat Leads in Capital Expenditure, Punjab Lags Behind

Gujarat Leads Major Indian States in Capital Expenditure Allocation

Gujarat emerged as the frontrunner among major Indian states in the financial year FY25 by allocating 25% of its total expenditure towards building capital assets, a feat driven by interest-free loans from the Central government. According to reports by Saikat Neogi, Gujarat’s commitment to capital expenditure surpassed that of other major states.

In FY25, the Centre’s contribution to capital expenditure as a percentage of total expenditure was 21.6%. Following Gujarat, Madhya Pradesh and Odisha allocated 22.2% each towards capital expenditure, with Assam and Uttar Pradesh also making significant investments in this sector. On the other hand, Punjab and Haryana lagged behind, with capex accounting for just 5.4% and 7.8% of their total budgets, respectively.

Additionally, Punjab allocated approximately 18% of its total expenditure towards interest payments in FY25, primarily due to its high outstanding liabilities as a percentage of gross state domestic product, standing at 46.6%. It is worth noting that some states, like Kerala, undertake capital expenditure through mechanisms outside the traditional Budget process, utilizing entities such as the body corporate KIIFB.