Government spending on infrastructure has grown fivefold since 2014 to 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 to 2014.

Real capital expenditure by the Centre, including grants to states to create public goods, rose sharply ₹90.87 trillion during 2014-26, from ₹17.04 trillion in the previous decade (2004-2014), underscoring the government’s continued 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 has increased to ₹64.70 trillion during 2014-26 from ₹12.39 trillion in 2004-14, while subsidies for capital asset formation amounted to ₹26.17 trillion in the last 12 years. These grants are given to states for projects like school buildings under Samagra Shiksha and houses under Pradhan Mantri Awas Yojana.

Read also | The government will expand the scope of investment from FY28 to include asset modernization and technology spending

Effective capital expenditure refers to capital expenditure by the center along with subsidies given to states and other agencies to build infrastructure assets such as roads, schools and houses.

Monday was the first day of the monsoon session of Parliament, which will sit till August 13.

Sitharaman informed the House that effective capital expenditure captures both the Centre’s own capital expenditure and the grants given to states for asset creation, which provides a broader measure of public investment. Capital asset formation grants are accounted for separately from 2010-11 onwards, while for 2004-05 to 2009-10 effective capital expenditure is treated as capital expenditure.

Queries sent to the finance ministry on Monday went unanswered.

Focused on investment-led growth

Experts said the five-fold increase in effective capital expenditure reflected the government’s emphasis on investment-led growth.

“Public investment in infrastructure creates productive assets that improve connectivity, reduce logistics costs and increase economic efficiency. Over time, this creates the conditions for higher productivity, employment and private investment. While execution remains critical, sustainable 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.Tech Securities and fin.

Read also | States prompted to select priority areas for ₹ 2 tn capex loan scheme

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

For FY27, the government budgeted effective capital expenditures of ₹17.15 trillion inclusive ₹12.22 trillion of the center’s own investments and ₹4.93 trillion in grants to states for asset creation.

The finance minister said higher capital spending boosted infrastructure across roads, rail, urban infrastructure, energy and digital connectivity while improving logistics efficiency, creating jobs and spurring private investment.

Investment priority

She said the government would continue to prioritize efficient capital expenditure through budgetary allocations and support to states under the Special Assistance to States for Capital Investment (SASCI) programme, including the Pride of Hills component for the North-Eastern and hilly states.

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

Mint had earlier reported on June 25 that the Ministry of Expenditure under the Union Finance Ministry has asked states and Union Territories (UTs) to limit their proposals under their ₹2 trillion, a 50-year interest-free loan program for capital expenditure to up to five priority sectors in FY27 for better results from efforts to boost growth through public spending.

Read also | India Inc’s capex hiatus deepens as financial stakes rise

The center’s higher capital expenditures in recent years have funded several key infrastructure projects. These include the Atal Setu (Mumbai Trans Harbor Link), India’s longest sea bridge connecting Mumbai to Navi Mumbai; Chenab Railway Bridge in Jammu and Kashmir, the tallest railway arch bridge in the world; the construction of the Delhi-Mumbai Expressway, one of India’s largest greenfield highways; 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 operationalization of the Namo Bharat Regional Rapid Transit System (RRTS) corridors. The Center has also expanded investments in metro projects, airports, ports, renewable energy transmission networks and digital infrastructure under PM GatiShakti.