In FY24, they had made a capital expenditure of Rs. 28.3 trillion, showing an annual growth of 2.65 per cent, as per the detailed Gross Fixed Capital Formation (GFCF) figures for FY25 released by the ministry.
On the other hand, government capital spending slowed to 10.2 per cent in FY25 from 18.5 per cent in FY24, while total investment growth held at 8.2 per cent in FY25 compared to 9 per cent in year ago period.
Total investments in fixed assets stood at Rs 99.76 trillion in FY25.
“Capital expenditure of state governments has actually moderated to manage the fiscal deficits,” according to Madan Sabnavis, chief economist at Bank of Baroda.
He said that the slowdown in public investment reflected a step by states to rein in their finances and keep deficit in check. Machinery and equipment is the single largest slice of corporate investment at nearly half the total, with growth rebounding to about 6 per cent from barely 1 per cent a year earlier.
This was followed by spending on dwellings, buildings and structures, while intellectual property products also trailed closely.
Sabnavis reckoned that the corporate investment revival, however, is narrow and not broad-based. He said the FY25 expansion was in line with his expectations, but stressed that the pickup is concentrated among infrastructure-linked firms rather than spread across industry.
Public Non-Financial Corporations and the general government together formed about 24.2 per cent of the total GFCF.
Household capital expenditure refers to the investments made by individual households and unincorporated micro-enterprises in long-term physical assets. And what households invest in is, overwhelmingly, bricks and mortar.
Close to three-quarters of household investment — nearly Rs. 33 trillion — went into dwellings, buildings and other structures. That one stream is the largest in the entire economy, and it anchors a broader construction boom: buildings and structures of every kind, from housing to highways, made up 58.8 per cent of India’s fixed investment in FY25.
Seen by type of asset, the rest of the picture falls into place. Machinery and equipment accounted for a further 30.6 per cent of the total, and intellectual property products for 10.4 per cent — leaving about 0.2 per cent, in cultivated biological resources such as orchards, plantations and livestock.
Data further revealed that, of what India invested in intellectual property — software, research and development, databases, etc.— private corporations accounted for about Rs. 8.5 trillion, or close to four-fifths of the total.
The government and public sector together managed just under Rs. 1.9 trillion, about a fifth, with the general government alone contributing around Rs. 1 trillion. Sabnavis expects GFCF to grow very marginally, going forward, and the pattern to endure.
“The household sector will continue to lead, because of the construction part, while the private sector is more because of machinery,” according to Sabnavis.
