Govt infra spending rises fivefold since 2014, touches nearly ₹91 trillion

New Delhi: Prime minister Narendra Modi’s government has sharply increased infrastructure spending since coming to power in 2014, with allocations rising to more than five times the level seen in the decade up to 2014.

The Centre's effective capital expenditure, including grants to states for creating public assets, surged to ₹90.87 trillion during 2014-26, from ₹17.04 trillion in the previous decade (2004-2014), underscoring the government's sustained push to use public investment as a driver of economic growth and infrastructure creation.

In a written reply to the Lok Sabha on Monday, finance minister Nirmala Sitharaman said the Centre's direct capital expenditure increased to ₹64.70 trillion during 2014-26 from ₹12.39 trillion during 2004-14, while grants-in-aid for creation of capital assets amounted to ₹26.17 trillion over the past 12 years. These grants are provided to states for projects such as school buildings under Samagra Shiksha and houses under the Pradhan Mantri Awas Yojana.

Effective capital expenditure refers to the Centre's capital expenditure along with grants-in-aid provided to states and other agencies for the creation of infrastructure assets such as roads, schools and houses.

Monday was the first day of the Monsoon Session of Parliament that will sit till 13 August.

Sitharaman informed the house that effective capital expenditure captures both the Centre's own capital spending and grants given to states for asset creation, providing a broader measure of public investment. Grants for creation of capital assets have been accounted for separately since 2010-11, while for 2004-05 to 2009-10, effective capital expenditure has been treated as equal to capital expenditure.

Queries sent on Monday to the finance ministry remained unanswered.

Investment-led growth focused

Experts said the fivefold increase in effective capital expenditure reflects the government's emphasis on investment-led growth.

“Public investment in infrastructure builds productive assets that improve connectivity, reduce logistics costs and enhance economic efficiency. Over time, this creates conditions for higher productivity, employment and private investment. While execution remains critical, sustained capital formation can strengthen India's long-term growth potential and support broader economic development,” said Prashant Shah, co-founder and chief executive officer (CEO) of Definedge Securities, a stockbroking and fintech firm.

The Centre also highlighted a steady increase in capital expenditure as a share of gross domestic product (GDP) since the pandemic. The ratio rose from 1.6% in 2014-15 to 3.2% in both 2023-24 and 2024-25, before easing marginally to 3.1% in 2025-26 (provisional).

For FY27, the government has budgeted effective capital expenditure of ₹17.15 trillion, including ₹12.22 trillion in the Centre’s own capex and ₹4.93 trillion in grants to states for asset creation.

The finance minister said that the higher capital spending has strengthened infrastructure across roads, railways, urban infrastructure, energy and digital connectivity, while improving logistics efficiency, generating employment and crowding in private investment.

Ranen Banerjee, partner and leader, economic advisory, PwC India, said: “Capital expenditure has been a focus of all governments and the need is much more than what governments can finance within the fiscal constraints. A good measure to look at is what percentage of GDP we are spending in a particular sector. If we look at the capex to GDP ratio it has improved significantly over the years. We must, however, look at the data on the items of inclusion in the capex as that has changed over the years and, hence, these numbers over a long period of time may not be strictly comparable.”

Capex priority

She said the government will continue prioritising effective capital expenditure through budgetary allocations and support to states under the Scheme for Special Assistance to States for Capital Investment (SASCI), including the Pride of Hills component for northeastern and hilly states.

Further, initiatives such as the PM GatiShakti National Master Plan, the National Logistics Policy and the PM GatiShakti Public Platform would further strengthen integrated infrastructure planning, inter-agency coordination and technology-enabled project implementation.

Earlier, Mint reported on 25 June that the Department of Expenditure under the Union finance ministry had asked states and Union Territories (UTs) to limit their proposals under its ₹2 trillion, 50-year interest-free loan scheme for capital expenditure to a maximum of five priority sectors in FY27 for better outcomes from its effort to boost growth through public spending.

The Centre's higher capital expenditure has funded several key infrastructure projects in recent years. These include the Atal Setu (Mumbai Trans Harbour Link), India's longest sea bridge connecting Mumbai with Navi Mumbai; the Chenab Rail Bridge in Jammu & Kashmir, the world's highest railway arch bridge; construction of the Delhi-Mumbai Expressway, one of India's largest greenfield expressways; rapid progress on the Mumbai-Ahmedabad High-Speed Rail (Bullet Train) corridor; expansion of dedicated freight corridors to improve logistics; redevelopment of railway stations under the Amrit Bharat Station Scheme; and the rollout of Namo Bharat Regional Rapid Transit System (RRTS) corridors. The Centre has also expanded investment in metro rail projects, airports, ports, renewable energy transmission networks and digital infrastructure under the PM GatiShakti framework.