'States need to step in': Economic Survey flags gaps despite Centre’s infrastructure momentum

Despite the Centre’s aggressive capital expenditure (Capex) drive, many states have failed to match the momentum, according to the Economic Survey 2025. While the Union government has prioritized infrastructure expansion, the report highlights a significant unmet demand for development due to lackluster spending at the state level.

"Despite such earnest efforts by the union government and quite a few state governments and public sector undertakings supplementing these efforts with increased capex, there is still a significant unmet demand for infrastructure development," the survey states.

To bridge this gap, the report stresses the need for innovative financing solutions and increased private sector participation.

With poll process settling, the Centre’s infrastructure spending is expected to accelerate in the remaining months of FY25. Ministries linked to infrastructure utilized 60% of their budgeted Capex between April and November 2024, outpacing the progress seen in fiscal 2020, when the last Lok Sabha elections were held.

According to Comptroller General of Accounts data, the Ports and Shipping, Civil Aviation, and Railways sectors saw the highest Capex utilization, reinforcing the government’s commitment to long-term infrastructure development.

The Economic Survey highlights that capital expenditure on major infrastructure sectors has grown at a trend rate of 38.8% from FY20 to FY24, a reflection of the government's aggressive push for development.

"There is general agreement that current infrastructure spending needs to be increased to achieve these objectives. Keeping this in view, the government has laid a special focus on infrastructure in the last five years," the report states.

Among infrastructure sectors, Railways has continued to see significant investment:

• 17 new pairs of Vande Bharat trains were introduced between April and October 2024.
• 228 new coaches were manufactured, expanding the network’s capacity.
• Railway station modernization, locomotive upgrades, and passenger amenities have improved service quality and efficiency.

While network expansion remained on track, the Economic Survey underscores the need for states to step up their contributions to national infrastructure goals.

With Viksit Bharat as the long-term vision, the Economic Survey emphasizes that achieving ambitious infrastructure goals will require stronger coordination between the Centre, state governments, and private stakeholders. The next phase of India’s growth depends not just on federal spending but also on states matching the momentum.