State governments started 2026-27 on a cautious note, with an estimated 8% dip in their budgetary capital expenditure and moderate growth in revenue expenditure. Data compiled from 20 major states showed that aggregate capital expenditure fell 8.2% year-on-year to Rs 20,931 crore in April 2026, reversing the 15.9% growth recorded in the corresponding month of the previous year. The decline suggests that states may be prioritising fiscal prudence and preserving financial flexibility amid heightened global uncertainty and concerns over the impact of geopolitical tensions on growth, inflation and public finances.