New Delhi, Jan. 28 -- India's recent growth outcomes have been shaped to a significant extent by the Government of India's (GoI) capital expenditure. The post-pandemic recovery in real GDP growth was supported by large expansions in the GoI's capex, to the tune of ~30% per annum during FY21-24. As a proportion of GDP, such capital spending had nearly doubled to 3.2% in FY24 from 1.7% in FY20, although a part of this is admittedly on account of off-budget capex that has now come on budget.

Likewise, the recent slowdown in GDP growth, to 6.0% in H1 FY25 from 8.2% in FY24, has been partly driven by a slump in the GoI's capital expenditure, which has witnessed a double-digit decline during this period, owing to the general elections in Q1 an...