Capital Expenditure
Expenditure Beginnerपूंजीगत व्यय
Definition
Capital expenditure (capex) is spending that results in creation of physical or financial assets, or reduction in financial liabilities. It includes investment in infrastructure (roads, railways, ports), purchase of machinery, equity investments, and loans given to states and PSUs. Capital expenditure contributes to long-term economic growth.
How Capital Expenditure Appears in India's Budget
Capital expenditure for 2026-27 is Rs 12.22 lakh crore, reflecting the government's push for infrastructure-led growth.
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Why Capital Expenditure Matters
Understanding capital expenditure is essential for anyone following government finances, preparing for competitive exams, or analysing India's economic policy. This concept directly affects how the government allocates resources and plans its fiscal strategy.
In the context of India's Union Budget 2026-27, with a total size of Rs 53.47 lakh crore, terms like capital expenditure help citizens and analysts evaluate whether the government is on the right fiscal path. The numbers in the budget are only meaningful when one understands the underlying concepts.
For UPSC aspirants, capital expenditure is frequently tested in both Prelims and Mains, particularly in Paper III (Economic Development). For CA and MBA students, this concept appears in public finance and macroeconomics courses.
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