Capital expenditure not slashed, but hiked to Rs 11.21 lakh cr for FY26, says FM Sitharaman

New Delhi: Finance Minister Nirmala Sitharaman on Tuesday said the capital expenditure has not been cut, but has gone up to Rs 11.21 lakh crore for 2025-26 fiscal, and there has been proportional increase in loans given to states for capital expenditure for the same year.

Replying during the Question Hour in Rajya Sabha, Sitharaman said the capital expenditure was at Rs 11.11 lakh crore in 2024-25.

“Actually, (in) the budget this year..., it has gone up to Rs 11.21 lakh crore. So, the capital expenditure has not been cut at all,” she said.

“So, cutting down the capital expenditure is not the case with us,” she added.

Sitharaman was responding to a question by senior Congress leader and former finance minister P Chidambaram.

Chidambaram sought to know the reason for reduction in the capital expenditure for FY25 in the revised budget estimate to Rs 10,18,429 crore from Rs 11.11 lakh crore. Similarly, he pointed out that the special assistance to states was reduced to Rs 2,99,891 crore in the revised budget estimate from Rs 3,90,778 crore for FY25.

The Finance Minister further said there has been an increase in release of loans to states since the introduction of the scheme for interest-free 50-year special assistance to states for capital expenditure in 2020-21. For 2020-21, a

special assistance of Rs 9,912 crore was approved to states, but the actual release was Rs 11,830 crore.

Similarly in 2021-22, Rs 15,928 crore was approved but Rs 14,186 crore was released. In 2022-23, Rs 95,147 crore approved, Rs 81,195 crore was released. In 2023-24, Rs 1,27,492 crore approved, Rs 1,00,954 crore released. In 2024-25, Rs 1,53,673 crore was approved, and up to March 26 about Rs 1,46,362 crore was released to states, she added.

Replying to a supplementary on whether the Centre monitors if states are using the funds for capital expenditure or any other things, the she said: “Not that instant when the money is sent, I would not know whether it is used for capital expenditure.” Gradually with time lag, various digital ways in which today money is put in specific nodal accounts for expenditure, the Centre comes to know, she said.