Capital Expenditure in the economy refers to the spending by the government or private sector on acquiring, creating, or maintaining long-term assets that contribute to economic productivity. This includes investments in infrastructure (roads, bridges, railways, ports), machinery, equipment, buildings, land, and technology upgrades. It also includes loans and advances given to state governments or public enterprises that are used for asset creation.

Capital expenditure is vital for economic growth and development. It leads to the creation of durable assets that enhance the economy’s productive capacity, improve the delivery of public services, and generate long-term benefits. In the public sector, higher capital spending stimulates job creation, attracts private investment, and has a multiplier effect on overall economic activity. For a country like India, increasing capital expenditure is essential to modernize infrastructure, bridge regional disparities, and improve ease of doing business. It also supports key developmental goals such as urbanisation, industrialisation, digital infrastructure, and climate resilience. Unlike revenue expenditure, which meets immediate needs, capital expenditure builds the foundation for future growth. Prudent and efficient capital spending strengthens fiscal sustainability and ensures the economy moves toward a high-growth, inclusive, and resilient path.