'Centre, state, CPSE capex growth may slow in FY25'

The likelihood has prompted policymakers to address the slowdown in the Union budget.

- Rhik Kundu

Capital expenditure by central infrastructure ministries, central public sector enterprises (CPSEs), and state governments is expected to slow in FY25 after rising to a five-year high of 5.87% of GDP in FY24 due to reduced spending in the first two quarters, two people familiar with the matter said.

The likelihood has prompted policymakers to address the slowdown in the upcoming Union budget.

In FY24, capital expenditure by the Centre, CPSEs, and state governments reached ₹17.35 trillion, or 5.87% of GDP, marking an increase from ₹13.57 trillion, or 5.03% of GDP, in FY23, according to data from the Ministry of Finance.

Capital expenditure had fluctuated in the preceding years. In FY20, it stood at ₹11.57 trillion, or 5.76% of GDP, which decreased to ₹10.70 trillion, or 5.39% of GDP, in FY21. The figure then rose again to ₹12.57 trillion, or 5.33% of GDP, in FY22.

To be sure, the Indian economy was recovering from the pandemic during FY21 and FY22.