State capex utilisation eases in Q1FY27, remains mid-range over six years

States utilised 10.67 per cent of their FY27 capital expenditure budget in the first quarter, lower than a year ago, although absolute spending touched a six-year high

Capital expenditure (capex) by 22 states eased in proportionate terms in the first quarter of financial year 2026-27 (Q1FY27) compared with Q1FY26. However, the pace of spending held roughly in the middle of the range seen over the past six financial years, an analysis of monthly accounts released by the Comptroller and Auditor General (CAG) of India shows. 

In Q1FY27, states utilised 10.67 per cent, or ₹1.11 trillion, of their combined budgeted capex allocation of ₹10.45 trillion for the year. That is down from the 10.94 per cent they had spent in Q1FY26. 

The Q1 utilisation rate has moved within a fairly narrow band since FY22 — the earliest year for which the CAG's monthly accounts series is available. The weakest opening quarter was in FY23, when states spent just 9.02 per cent of their budgeted capex, followed by FY25 at 9.73 per cent. The 10.67 per cent spending in Q1FY27 sits above both of those years but below Q1FY26 (10.94 per cent), Q1FY22 (11.50 per cent), and Q1FY24 (13.23 per cent). 

 

In absolute terms, however, the picture is stronger. The ₹1.11 trillion spent in Q1FY27 was the largest first-quarter capex spending in the six-year window, higher than the ₹1.06 trillion spent in Q1FY26. 

Kerala led the charts, having utilised 36.41 per cent of its annual capex in the first quarter. It was followed by Madhya Pradesh (18.21 per cent), Andhra Pradesh (16.61 per cent), Haryana (16.26 per cent), and Himachal Pradesh (15.90 per cent). 

At the other end of the spectrum, Tripura utilised just 1.81 per cent of its allocation during the same period, while West Bengal (1.89 per cent) and Meghalaya (3.03 per cent) were also among the weakest performers. 

Several of the largest states by outlay continued to lag. Uttar Pradesh, the most heavily budgeted state with a capex allocation of ₹1.78 trillion, had spent just 6.34 per cent by the end of June. Odisha (5.19 per cent), Tamil Nadu (5.53 per cent), and Karnataka (6.83 per cent) were also among the slow movers. 

Further, in Q1FY27, the 22 states collectively spent ₹9.66 trillion, or 18.52 per cent, of their combined budgeted revenue expenditure of ₹52.14 trillion for the full year. 

Himachal Pradesh recorded the highest utilisation at 25.01 per cent, followed by Andhra Pradesh (24.66 per cent), Telangana (23.38 per cent), and Kerala (22.69 per cent). Jharkhand (12.38 per cent), Bihar (14.65 per cent), and Maharashtra (15.39 per cent) were among the slowest spenders. 

In tax revenue, the states in the first quarter collected ₹7.73 trillion, equivalent to 19.11 per cent of their combined budgeted tax revenue of ₹40.48 trillion for FY27.