FY25 capex should be close to revised aim of Rs 10.18 lakh crore, says govt source

The market reacted negatively to the government's capital expenditure (capex) numbers

The Centre's spending on capital expenditure should be close to the revised estimate of Rs 10.18 lakh crore for the financial year 2025-26, despite a slowdown in spending in the initial months of FY26.

"Capex by ministries such as railways and roads are on track and efforts are underway to boost infrastructure spending in defence. We should be close to the revised aim for capex," a senior government official said.

This official acknowledged that the current financial year effectively began in August due to general elections in India between April 19 and June 1, 2024 leading to a slowdown in spending on infrastructure.

"Elections, aggressive monsoon led to a slowdown in capex in the initial months, but now there is a pick," this official said.

While, the capital expenditure target for the current financial year was reduced to Rs 10.18 lakh crore from Rs 11.11 lakh crore earlier, the Budget for 2025-26 pegged it at Rs 11.21 lakh crore, almost flat on-year versus the initial aim.

As per the latest available data, capex spending was at Rs 6.9 lakh crore or 61.7 percent of the initial budgetary goal of Rs 11.1 lakh crore for FY25, compared with 67.3 percent spent during the April-November period last fiscal.

Capex Rush
"Capex should pick up. There will be a rush for legitimate expenditure. This is a peculiar year because we began in August due to elections. On the capex side, there will be a rush because ministries know their target. I foresee a rush of expenditure," the official said.

The Finance Ministry is even open to relax the condition for line ministries of 15 percent expenditure of their Budget Estimates in March, as per the cash management guidelines.

"Cash management guidelines are clear. If the expenditure increases beyond the 15 percent limit, they have to approach the Finance Ministry for approval. The purpose is to enable ministries to spend productively. If ministries approach, we don’t say no. We facilitate ministries to spend," the official added.

Ministries have to approach the Finance Ministry for approval if they want to spend more than 15 percent of their Budget Estimates in March, as per the cash management guidelines. The 15 percent cap is aimed at curbing last-minute spending spikes and promoting efficient budget utilisation throughout the financial year.

On loans to states for capital expenditure, the official said, "We have been giving them. The disbursement is about Rs 1.10 lakh crore till January. The revised target is Rs 1.25 lakh crore, as it is tied to certain conditions."