States utilise less than half of FY26 capex budget in Apr-Dec period

CAG data show states spent just 45.8% of their FY26 capital outlay in the first nine months, sharply lagging the Centre's capex performance

After the first three quarters of 2025-26 (April-December), states have managed to spend just 45.8 per cent, or ₹3.8 trillion, of their combined annual budgeted capital expenditure (capex) of ₹8.35 trillion, according to an analysis of monthly accounts for 20 states released by the Comptroller and Auditor General (CAG) of India.

 

The subdued pace of capital spending by states contrasts sharply with the Centre’s performance during the same period. Central government capex reached 70.3 per cent of its Budget Estimates (BE) in the first nine months of FY26, from April to December, according to the latest data from the Controller General of Accounts (CGA).

 

Of the 20 states for which data is available, 14 spent less than half of their BE for capital expenditure during April-December. Telangana stood out as an outlier, emerging as the only state to exceed its budgeted capex, with utilisation at 116.95 per cent. Haryana followed at 97.49 per cent, Kerala at 66.53 per cent and Himachal Pradesh at 61.24 per cent.

 

At the other end of the spectrum, seven states recorded particularly weak progress. Tripura spent 22 per cent of its budgeted capex during the period, while West Bengal utilised 24.4 per cent. Chhattisgarh (27.1 per cent), Manipur (29.4 per cent), Meghalaya (30.4 per cent), Punjab (33.5 per cent) and Uttar Pradesh (34.4 per cent) each spent less than 35 per cent of their annual allocation.

 

By comparison, data for 25 states in the previous financial year showed much stronger utilisation. In FY25, states collectively spent 80.2 per cent of their budgeted capital expenditure, amounting to ₹7.8 trillion out of a total allocation of ₹9.7 trillion.

 

Revenue expenditure progressed more steadily. During April-December, the 20 states spent 60.9 per cent of their budgeted revenue expenditure of ₹38.73 trillion. Himachal Pradesh recorded the highest utilisation at 71.1 per cent, followed by Punjab at 68.3 per cent and Kerala at 67.6 per cent. Jharkhand (53.9 per cent), Tripura (51.8 per cent) and Manipur (49.1 per cent) were among the lowest spenders.

 

On the receipts side, states collected 66.2 per cent of their budgeted tax revenue of ₹29.7 trillion during the same period. Assam led with collections equivalent to 72.6 per cent of its annual target, followed by Haryana at 72.3 per cent and Gujarat at 70.9 per cent. Uttar Pradesh, Rajasthan, and Manipur were among the weakest performers on tax revenue.

 

Borrowings and other liabilities crossed the halfway mark, with states utilising 50.2 per cent of their budgeted borrowings, raising ₹4.5 trillion against a full-year target of nearly ₹9 trillion for FY26.

 

Noting that state capex typically accelerates in the closing months of the financial year, Rajani Sinha, chief economist at CareEdge Ratings, said trends at the state level warrant close attention, given the historical underutilisation of budgeted capital expenditure.