Railways, defence spends lift govt capital expenditure 51% in January

Capital expenditure for road ministry in the month of January 2025 was down 63 per cent over the corresponding month last year

Centre’s capital expenditure in January 2025 witnessed a year-on-year (Y-o-Y) increase of over 51 per cent led by expenditure for Railways, transfers to states, and capital outlay on defence services, Controller General of Accounts’ data showed.

 

Capital expenditure for road ministry in the month of January was down 63 per cent over the corresponding month last year. Overall, the road ministry has achieved 87 per cent of the budgeted capital expenditure for April-January period of FY25, at the same level as FY24.

 

Railways, the other major driver of capital expenditure in the country, saw an increase of 11 per cent in the spend for January 2025 over January 2024. The Railways ministry has utilised 83 per cent of its budgeted target for April-January FY25 compared to 84 per cent in the corresponding period of FY24.

 

Transfers to states were up 87 per cent in January 2025 compared to January 2024, giving a push to overall capital expenditure. The Centre has spent 89 per cent of the funds allocated under capital expenditure for transfers to states in April-January FY25 against 67 per cent in the corresponding period of FY24. 

 

“Capex numbers for both December and January are up. The Centre has made up nearly 75 per cent of the target in 10 months, going up from 52 per cent to 75 per cent in just two months. They can reach the target in the next two months if the push continues in areas that are lagging. Expenditure for urbanisation and defence should catch up,” said Rumki Majumdar, economist, Deloitte India.

 

Signalling a pickup in private capital expenditure, the data by Centre for Monitoring Indian Economy released in February, meanwhile, showed that the proposals to set up new capacities in January 2025 reached ₹6 trillion — three times the value of new investments proposed in December 2024 at ₹2.1 trillion.

 

The government is expecting to undertake capital expenditure of ₹10.18 trillion, according to the Revised Estimates for FY25, missing the target by about ₹93,000 crore. Compared to BE of FY25, the capex allocation has seen an increase of less than 1 per cent in FY26.

 

“There is no reduction in public spending on capital expenditure. We continue to place emphasis on capex, which has sustained us,” Finance Minister Nirmala Sitharaman had said during the post-Budget briefing.

 

The pace of capital expenditure in the first half of FY25 had suffered on account of elections and the model code of conduct.

 

The government had hiked capex by 37.5 per cent to ₹10 trillion for FY24. The stress on capex, especially post-Covid, has been not just to build infrastructure and have multiplier effects on the economy but also to crowd in private sector investments.