The government has spent over one-third of its total CAPEX budget for the fiscal year (April 2023 to March 2024) so far

Despite this being a pre-election year, the government has maintained its focus on capital spending

The central government has maintained its focus on capital spending, as it has over the past eight years. Spending priorities have remained largely unchanged despite the upcoming national elections in June 2024, which generally see a spike in subsidy and welfare spending. B2B companies serving the construction, infrastructure, and transport sectors should expect continued robust spending in these sectors by the central government. At the same time, companies should also pay attention to state CAPEX and prioritize states that have shown strong spending patterns, such as Karnataka, Arunachal Pradesh, and Bihar.


  • The Indian government has made its priority toward capital expenditure on large infrastructure projects clear through its successive annual budgets. In the budget for FY 2023–2024 (April 2023 to March 2024), the government announced a whopping 37% YOY increase in capital spending, compared to a total spending increase of 8% YOY.
  • Within capital expenditure, the largest increases were allocated to road transport, highways, railways, renewable energy, and housing.
  • Despite setting aggressive capital spending targets, the government has ensured that it hits its budget commitments. In the first four months of the current FY 2023–2024, the government already spent 32% of its intended capital expenditure for the year, compared to 28% during the same period last fiscal year.

Our View

Considering that the current BJP-led alliance is likely to get re-elected in the June 2024 national election, firms should have a high degree of confidence in the government’s continued focus on capital spending as a medium-term growth driver. Aside from capital CAPEX at the central level, firms should also pay attention to CAPEX from states, which contribute to half the total public capital spending in the country. State CAPEX has grown at a combined CAGR of about 20% since 2019. Karnataka, Arunachal Pradesh, Bihar, Jharkhand, Madhya Pradesh, Himachal Pradesh, and Chhattisgarh were among the top CAPEX spenders in FY 2022–2023.

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