Karnataka, Keralam, Assam report strong capex in H1

Karnataka’s tax revenues rose 18.9% to Rs 1.36 lakh crore, up from 8.8% a year earlier. Assam recorded 16.2% growth to Rs 41,924 crore, up from 14.6% in H1FY26. Kerala’s revenue spending increased 16.2% to Rs 95,551 crore, accelerating from 6.7% growth in H1FY26. Assam’s revenue expenditure rose 4.2% to Rs 49,683 crore, compared with 6.4% growth a year earlier. Karnataka’s revenue expenditure declined 7.4% to Rs 1.19 lakh crore, reversing an 11% increase in the year-ago period.

Keralam’s borrowings and liabilities rose 15.3% to Rs 35,468 crore in H1FY27. Karnataka reported a net repayment of Rs 6,119 crore against Rs 16,807 crore borrowed a year earlier. The Centre is nudging states and public sector enterprises to keep the momentum in capex to boost economic activity even as private capex has started to expand. The key challenge for all three states will be sustaining capital spending while keeping fiscal pressures in check.

In this context, states' spending on subsidies has a bearing on their productive spending. Aggregate subsidy bill for 20 major states is estimated at Rs 5.39 lakh crore in FY27, only marginally higher than the Rs 5.31 lakh crore spent in FY26. Over Rs 4.94 lakh crore was spent on this front in FY25. 7; Input cost inflation eased, manufacturing strong The near-flat aggregate, however, masks substantial shifts in spending across states.

Karnataka remains the biggest spender, with its subsidy and financial assistance outlay projected to rise 9% to Rs 1.03 lakh crore in FY27. Tamil Nadu, the second-largest spender in FY26, has budgeted a 15.7% reduction to Rs 61,097 crore.