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18 Major States' Capex Grows 25.7% in Q3 FY26, ₹1.5 Trillion Interest-Free Loans Drive 16-18% Annual Growth

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19 Feb 2026
~2 min
Source: Indian Express
Key Data:18 states (89% GDP)Revenue growth 7.7%State GST growth 3.3%Capex growth Q3 25.7%Capex loan ₹1.5 trillionDisbursed ₹1.0 trillion
Bodies:ICRA
Practice MCQs from today's news ▸
What This Article Covers

1.For FY 2025-26, an analysis of 18 major states (comprising 89% of India's GDP) shows revenue growth at 7.7% (vs. 22% budgeted), but capital spending expanded by 25.7% in Q3.

2.The Centre's 50-year interest-free capex loan of ₹1.5 trillion has been a key driver; ₹1.0 trillion was disbursed by Jan 2025, with ₹466 billion pending for Feb-Mar.

3.State capex is now the crucial growth lever, projected to grow 16-18% annually, offsetting a potential contraction in Union government capex and holding the key to economic momentum.

The Big Picture
Prelims · HighMains · Medium

Analysis of 18 major states' finances reveals a divergence: while revenue growth lags budgets, capital expenditure (capex) is accelerating sharply, supported by Central interest-free loans. This state-led capex, expected to grow 16-18% in FY26, is critical for sustaining national economic momentum, especially as Central government capex may contract.

Exam Lens

Quick Exam Facts From News

States Analyzed18 major states (89% of India's GDP)
Revenue Growth (Apr-Dec FY26)7.7% (vs. 22% budgeted)
State GST Growth3.3%
Capex Growth (Q3 FY26)25.7%
Total Capex Loan Allocation FY26₹1.5 Trillion
Capex Loan Disbursed by Jan 2025₹1.0 Trillion
Projected Annual Capex Growth16-18%

1-Minute Revision

  • ›States Analyzed: 18 major states (89% of India's GDP)
  • ›Revenue Growth (Apr-Dec FY26): 7.7% (vs. 22% budgeted)
  • ›Target this Data: 18 major states comprise 89% of India's GDP.
  • ›Target this Data: State capex grew by 25.7% in Q3 of FY 2025-26.
  • ›Target this Nodal Body: The Central Government (Ministry of Finance) provides 50-year interest-free capex loans to states.
  • ›Target this Data: Total capex loan allocation for FY26 is ₹1.5 trillion, with ₹466 billion pending disbursement.

Mastered this topic? Test your knowledge with a full MCQ quiz.

Practice exam-style questions, track your score, and strengthen your recall.

Q1Static LinkageEasy

Which constitutional body is primarily responsible for recommending the distribution of tax revenues between the Centre and States?

Q2Statement-basedMedium

Consider the following statements regarding the analysis of state finances for FY 2025-26:

1. The combined revenues of 18 major states grew by 7.7%, significantly below their budgeted growth of 22%.

2. State GST collections showed robust growth, contributing majorly to the overall revenue increase.

3. Capital expenditure by states expanded by 25.7% in the third quarter, driven by central interest-free loans.

Which of the statements given above is/are correct?

Q3Data-centricEasy

According to the article, what is the total allocation for interest-free capex loans from the Centre to states for the financial year 2025-26?

Q4Application/ImpactMedium

What is the primary significance of the recent growth in state capital expenditure, as highlighted in the article?

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