Union Budget 2025: FM Allocated ₹11.21 lakh Crore for Capital Expenditure

On February 1, 2025, FM Nirmala Sitharaman allocated ₹11.21 lakh crore for capital expenditure (capex), in Union Budget 2025. This indicates the government’s focus on infrastructure-driven growth. This allocation represents a 0.9% increase from the capex allocation in FY25. The government’s projected effective capital expenditure for FY26, which includes both the Centre and states, is ₹15.48 lakh crore.

The revised estimate (RE) for FY25 has been lowered to ₹13.18 lakh crore, down from the budget estimate (BE) of ₹15.01 lakh crore.

Previous Budget Allocation

In Budget 2024, Finance Minister Nirmala Sitharaman allocated ₹11.11 lakh crore for capex, maintaining the same level as the interim budget presented in February. This allocation accounted for 3.4% of GDP. During the Union Budget 2025-26, the revised capex for FY25 was reduced to ₹10.18 lakh crore. The revised estimate for FY24 capex stood at ₹9.50 lakh crore, lower than the previous estimate of ₹10 lakh crore. For FY23, the revised capex was ₹7.28 lakh crore.

Support for State Infrastructure 

The government also extended ₹1.5 lakh crore in interest-free loans to states to support their infrastructure priorities. Private sector investment in infrastructure was further encouraged through viability gap funding (VGF) and supportive policies. The government focused on balancing fiscal prudence with growth-oriented spending in the Budget, aiming to boost disposable income and strengthen public-private investments.

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