Capital expenditure by state governments likely grew a modest 5% year-on-year in 2025-26, as fiscally cautious states put the brakes on borrowings despite a moderation in tax revenue growth. Aggregate capital outlay by 18 major states rose 4.7% year-on-year to Rs 6.19 lakh crore in FY26. These states — Andhra Pradesh, Assam, Bihar, Chhattisgarh, Gujarat, Haryana, Himachal Pradesh, Karnataka, Kerala, Madhya Pradesh, Odisha, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh, Uttarakhand, West Bengal and Telangana — had recorded nearly 10% growth in capex to Rs 5.9 lakh crore in FY25.