Business News | General Govt Capex-to-GDP Likely to Stay Around 5% in FY26, Lower Than FY25P and FY24 Peak: Report
Get latest articles and stories on Business at LatestLY. The general government capital expenditure (capex) as a share of GDP in FY26 is likely to remain around 5 per cent, which is lower than 5.1 per cent in FY25P and much below the FY24 peak of 5.4 per cent, according to a report by Emkay Research.
New Delhi [India], October 13 (ANI): The general government capital expenditure (capex) as a share of GDP in FY26 is likely to remain around 5 per cent, which is lower than 5.1 per cent in FY25P and much below the FY24 peak of 5.4 per cent, according to a report by Emkay Research.
The report highlighted that public capex growth has remained strong in the first five months of FY26. During this period, the Centre has already spent around 39 per cent of its budgeted capital outlay, recording growth of over 43 per cent.
It stated "if the trend sustains, FY26 general government capex/GDP is likely to hit approx. 5 per cent, although it may still fall short of that in FY25P (5.1 per cent) and log much lower than the FY24 peak of 5.4 per cent".
States have also shown healthy momentum, with their capex tracking 14 per cent growth, though this is below their ambitious budget estimate of 30 per cent growth for the year.
The report also noted that while factors such as base effects and sectoral anomalies have inflated the Centre's overall capex figures, the noise-adjusted "core capex" has also shown a solid increase over the past three quarters. This indicates a consistent improvement in productive capital spending.
On the States' side, performance has been commendable in recent years. States have achieved about 89 per cent of their budgeted capex in the last two fiscal years, compared to a 10-year average of around 80 per cent.
This achievement has come despite challenges such as slower revenue growth and continued spending on welfare schemes that have kept revenue expenditure high.
The report added that the Centre's healthy disbursement of the capex loan to States has played a key role in maintaining this momentum. If the current trend continues, the overall general government capex-to-GDP ratio for FY26 is expected to reach around 5 per cent.
For States, the capex-to-GDP ratio could improve slightly by 0.1 percentage point to reach 2.4 per cent in FY26, making it the second-highest level since FY17. However, this would still fall short of their ambitious FY26 budget estimate of 2.7 per cent.
The report also said that the continued focus on capital spending by both the Centre and States remains a positive sign for overall investment and economic growth. (ANI)
(The above story is verified and authored by ANI staff, ANI is South Asia's leading multimedia news agency with over 100 bureaus in India, South Asia and across the globe. ANI brings the latest news on Politics and Current Affairs in India & around the World, Sports, Health, Fitness, Entertainment, & News. The views appearing in the above post do not reflect the opinions of LatestLY)