Chandigarh, Aug. 8 -- Punjab has the lowest capital expenditure among the major states in the country, despite a 38% increase in capital outlay this year. The state government, in its budget estimates for the 2025-26 financial year, allocated Rs.10,302 crore for capital expenditure, up from Rs.7,445 crore in the previous year. While the increase appears significant due to the low base effect, the state's budgeted capital expenditure is lower than that of all major states, including Gujarat, Kerala, Maharashtra, Haryana, Uttarakhand, Andhra Pradesh, West Bengal, Chhattisgarh, Madhya Pradesh, Uttar Pradesh, Karnataka, Rajasthan, and Odisha. Capital expenditure is the government investment on the creation of assets that are long-term in nature, give a fillip to economic activity, and generate additional revenue streams. Income-generating capital assets typically recover their costs over time. Upinder Sawhney, former professor of economics at Panjab University, warned that low capital expenditure is detrimental to the financial health of Punjab. She said that stagnant or declining capital spending signals inadequate investment in development, poor asset creation and neglect of existing infrastructure. "In Punjab, market borrowings are being used to service interest payments and fund revenue expenditure requirements, rather than to build assets. Over the past 20 years, every government, regardless of political party, has pursued populist measures such as free electricity, free bus travel, and what not. This has not only limited their ability to invest in capital projects but also driven up debt," she pointed out, painting a bleak scenario ahead if the trend continues. The Punjab government's spending on asset creation has kept fluctuating in recent years, with successive governments falling short of their budgeted capital expenditure. In the 2024-25 financial year, against a capital expenditure of Rs.7,445 crore in budget estimates, the state government spent Rs.6,874 crore. In the previous financial year, capex spending was only Rs.4,743 crore against the full-year target of Rs.10,345 crore. A finance department official said that, unlike previous governments, the present government has made efforts to set more realistic budget estimates and accelerate capital expenditure by pushing infrastructure plans. "Regular meetings are held for updates on projects from the departments," he said. However, in the first quarter of the 2025-26 financial year, the state government has spent Rs.1,320 crore on capex, which is almost 13% of the total capital outlay for the year. A retired bureaucrat attributed the situation to 'unsustainable' subsidies, stating that despite rising revenues and market borrowings, successive governments' failure to spend on asset creation points to their skewed priorities and poor decision-making. "Populist measures like free electricity for 90% of households, coupled with Rural Development Fund (RDF) and other dues pending with the central government, have constrained their capacity to do more capex. But there appears to be no way out till the time the state government opts for course correction and makes tough choices," said the former IAS officer, requesting anonymity. In November 2023, a Bank of Baroda report, which studied the finances of 26 states, had put Punjab at the bottom of the ladder along with Chhattisgarh, Nagaland and Mizoram, calling them 'laggards' for slipping behind capex envisaged in their approved budgets....