Central government’s spending adjustments precipitated a 23.4% YoY plunge in India’s Q3 FY25-26 capex, per ICRA’s incisive report. Post-Q2’s 16.7% boom, total central-state outlays dipped to 4.2 lakh crore from 4.4 lakh crore annually.
State governments countered effectively: 24 states’ capex and lending rose 21.9%, escalating from 1.8 to 2.1 lakh crore, equaling central scale and bouncing from prior quarter lows.
ICRA eyes 7.2% GDP growth, off 8.2%, sustained above 7% via festivals and GST. Chief Economist Aditi Nair flagged hurdles: ‘Base effects, central capex cuts, state revenue deceleration, export frailties.’
Revenue expenditure stabilized—central non-interest fell 3.5% (vs. 11.2%), states +2.7%, combined +0.3% reversing Q2.
Fiscal prudence meets growth imperatives here. States’ surge buoys confidence, but analysts stress reinvigorating central capex for infra-led expansion. With global headwinds, this blend of moderation and regional strength positions India resiliently.