20 states spent 27% of capital expenditure in April-August: CAG data

States spent 27% of FY26 budgeted capex in April-August, with Telangana leading and Tripura lagging, even as rising borrowings raise fiscal concerns

States spent 27 per cent of their budgeted capital expenditure during April-August period of the financial year 2025-2026 (FY26), rising by 13.6 per cent year-on-year, an analysis of monthly account reports of 20 states by the Comptroller and Auditor General of India (CAG) showed. 

 

Of the 20 states, data for which is available, 16 states spent less than 30 per cent of their budget estimates (BEs) for capex in the first five months of FY26. Telangana led the group of 20 states by utilising the highest proportion of its BE, spending 39.28 per cent. Following closely were Kerala (38.82 per cent), Haryana (37.72 per cent), and Madhya Pradesh (32.79 per cent).

 

On the lower end, states like Tripura and Chhattisgarh spent just 6.53 per cent and 11.02 per cent of their budgeted capex, respectively.

 

Key states like Andhra Pradesh, Telangana, Gujarat, Haryana, Maharashtra, and Karnataka led the charge with double-digit and triple-digit growth in capital spending. However, Rajasthan, Punjab, Uttar Pradesh, West Bengal, and Tripura saw decline in capex compared to the same period in the preceding year. 

 

According to Controller General of Accounts (CGA) data released last month, the centre’s capex for April-July FY26 stood at 30.9 per cent of the FY26BE, rising by 32.7 per cent compared to last year.

 

Revenue expenditure of the 20 states increased modestly by around 8.7 per cent to ₹15.43 trillion during April-August period of FY26. Tax revenue collections grew 8.36 per cent to ₹12.5 trillion during the first five months of FY26.

 

States’ reliance on borrowings increased sharply during the first five months of FY26. Borrowings and other liabilities rose 23.9 per cent year-on-year, reaching ₹3.21 trillion in April–August. Among major states, Gujarat’s borrowings more than doubled to ₹13,227 crore in April–August FY26 from ₹5,027 crore a year earlier. Madhya Pradesh, Maharashtra, Jharkhand, and Odisha also saw major surges in borrowings. In contrast, Haryana, Uttar Pradesh, Meghalaya, and Tripura reported lower borrowing levels compared with the previous year.

 

Madhavi Arora, chief economist at Emkay Global Financial Services, said the budgeted growth in revenue expenditure (19 per cent) and capital expenditure (30 per cent) by states in FY26 is unrealistic. “While subsidies are set to be rationalised (5 per cent FY26BE growth), it remains to be seen if this materialises. With revenue also at risk due to GST 2.0, the axe may fall on capex,” she added.