States lag on capex, utilise just 51.8% of FY26 budget by January

By: Team India Tracker

The slowdown stands out against last year’s performance. In 2024–25, 25 states spent 80.2% of their budgeted capital outlay—Rs 7.8 lakh crore of the Rs 9.7 lakh crore allocated.

States have spent just over half of their combined budgeted capital expenditure in the first 10 months of 2025–26, highlighting a slow pace of public investment at the sub-national level. An analysis of monthly accounts for 23 states released by the Comptroller and Auditor General of India shows that between April and January, states utilised only 51.84 per cent of their combined capital expenditure (capex) allocation of Rs 10.37 lakh crore. In absolute terms, this translates to spending of about Rs 5.38 lakh crore during the period. 

Of the 23 states for which data is available, 12 have spent less than half of their budgeted capex for the year. Large states such as Karnataka, Maharashtra, Punjab and Uttar Pradesh are among those that have yet to reach the halfway mark. 

One clear outlier is Telangana, which has already exceeded its full-year capex target, achieving utilisation of 121.56 per cent. Haryana follows with utilisation of 92.75 per cent, while Kerala and Bihar recorded 82.09 per cent and 80.19 per cent respectively. 

At the other end of the spectrum, several states show particularly weak progress. West Bengal has spent only 29.06 per cent of its annual capex allocation, while Tripura has utilised 29.46 per cent. Other laggards include Chhattisgarh at 31.01 per cent, Meghalaya at 34 per cent, Uttar Pradesh at 36.53 per cent and Rajasthan at 38.47 per cent. 

The muted pace of state-level capital spending stands in contrast to the Centre’s performance over the same period. Data from the Controller General of Accounts show that the Union government had already achieved 76.9 per cent of its revised estimate for capital expenditure between April and January in FY26. 

The slowdown is also notable when compared with the previous financial year. In 2024–25, data for 25 states indicated that they had collectively spent 80.2 per cent of their budgeted capital expenditure by the end of the year, amounting to Rs 7.8 lakh crore out of a total allocation of Rs 9.7 lakh crore. 

Revenue expenditure, however, has progressed more steadily. Between April and January, the 23 states spent 68.22 per cent of their combined budgeted revenue expenditure of Rs 51 lakh crore. 

Among the states, Bihar recorded the highest utilisation of revenue expenditure at 82.9 per cent, followed by Himachal Pradesh at 81.8 per cent, Tamil Nadu at 77.1 per cent and Andhra Pradesh at 76.95 per cent. Lower utilisation levels were seen in Jharkhand at 56.74 per cent, Maharashtra at 57.25 per cent and Tripura at 57.69 per cent. 

On the revenue side, states have collected about 73 per cent of their budgeted tax revenue of Rs 38.1 lakh crore during the same period. Haryana leads with collections equivalent to 80.8 per cent of its annual target, followed by Assam at 80.1 per cent and Gujarat at 79 per cent. Among the weaker performers are Uttar Pradesh, Bihar, Rajasthan and Nagaland. 

Borrowings have crossed the halfway mark as well. States have already utilised 61.2 per cent of their budgeted borrowings, raising about Rs 8 lakh crore against a full-year target of Rs 13.1 lakh crore for FY26. 

According to India Ratings & Research, the overall capex effort by states is still expected to remain significant. Anuradha Basumatari, a director at the ratings agency, estimates that states will achieve a combined capex-to-GDP ratio of around 2.7 per cent in the current financial year, rising to about 2.9 per cent in FY27. 

Even so, the data suggest that a large portion of state capital spending may be pushed into the final months of the fiscal year—a familiar pattern that raises concerns about the efficiency and quality of public investment.