A CAPEX RESURGENCE

Record capex, strategic alignment, and private sector momentum are redefining the growth trajectory as a structural upcycle

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India’s growth story is entering a transformative phase, fuelled by a sharp resurgence in capital expenditure (capex) from both the public and private sectors. Recent data for the March ‘25 quarter and full fiscal year FY25 reveals a historic surge in investment activity - ₹19.8 lakh crore in new projects were announced in Q4 FY25 alone, the highest in at least six years. Not only has central government capital expenditure reached unprecedented levels, but private sector spending has also quietly built up a robust base.

Central Government’s Capex Surge: Intent Meets Execution

The government's capex trajectory between FY21 and FY25 has been exceptional, with spending growing at a compound annual growth rate (CAGR) of 24.3%. In absolute terms, capital spending rose from ₹4.26 lakh crore in FY21 to ₹10.5 lakh crore in FY25 - a remarkable scale-up in just five years.

What's critical here is not just the quantum but also the timing and distribution. FY25’s capex significantly accelerated in the second half (2HFY25), with spending up 39% year-on-year (y-o-y) to ₹6.4 lakh crore. This reflects a focused fiscal push as election-related uncertainty faded and economic signals turned more favourable. Notably, in March '25 alone, the central government's capital outlay soared to ₹2.4 lakh crore - its highest ever for a single month.

The major contributors - Ministry of Road Transport and Highways (27.1%), Railways (23.9%), and Defence (16.2%) - reflect a strategic prioritization of infrastructure, logistics, and national security. Although their share in total spending fell slightly (from 70.7% in FY24 to 67.3% in FY25), the absolute increase reflects a diversification of capex into new sectors.