The Fall And Rise Of India’s Capex

Capital expenditure is spending that creates an asset the government owns or reduces a liability — roads, track, ports, defence equipment, buildings, and lending to states and public enterprises. Everything else — salaries, pensions, interest, subsidies, grants — is revenue expenditure.

Two things to read carefully. The drop between 2004-05 and 2005-06 is largely an accounting change: on the Twelfth Finance Commission’s recommendation the Centre stopped lending to states, and that lending had been inside capital expenditure. And 2025-26 is a revised estimate, 2026-27 a budget estimate — the Modi row therefore ends on a plan, not an outturn. Every other year is an actual.

Each fiscal year is assigned to the party that governed it for the greater part, which puts 1979-80 with Janata, 1989-90 with Congress and 2004-05 with the UPA. Shares here are shown to one decimal so each row subtracts exactly; the table below rounds to the nearest point.

RE is a revised estimate, BE a budget estimate; every other row is an actual. Percentages are rounded for print, so a column will not always reproduce a difference exactly. The peak is 7.0% of GDP in 1978-79; the trough is 1.6% in 2017-18.