Budget 2025–26 Capex Focus: ₹11.2 Lakh Crore and Limited Household Income Smoothing

RBI’s Financial Stability Report and Annual Report 2024–25, along with recent Budget documents, present Indian households as saving less and borrowing more ahead of Union Budget 2026. Budget 2025–26 comprises capital expenditure of ₹11.2 lakh crore (effective capital expenditure ₹15.5 lakh crore), while a Study of Budgets 2024–25 shows States prioritise capital expenditure with limited revenue expenditure.

Household Finances Indicators and Budget 2025–26 Capex:

Dimension	Key Details
Data sources	RBI Financial Stability Report; RBI Annual Report 2024–25; Study of Budgets 2024–25; Budget 2025–26 documents
Debt level	Household debt comprises 41.3% of GDP (March 2025)
Debt peer comparison	China comprises 60.1%; Malaysia comprises 69.6%; Thailand comprises 88%
Trajectory (India)	Household debt comprises about 36% of GDP (mid-2021) and comprises 41% (2025)
Balance sheet stock indicators	Financial liabilities comprise 41.3% of GDP; gross household financial assets comprise 106.6% of GDP
Net financial savings	Net financial savings comprises 3–4% of GDP; later comprises 7.6% (Q4, 2024–25)
Income pattern	Real income growth comprises uneven growth, especially outside formal and high-productivity sectors
Borrowing use pattern	Borrowing comprises use to bridge income–expenditure gaps and comprises reduced use to create assets
State budgets	State governments comprise prioritisation of capital expenditure while limiting revenue expenditure
Committed expenditures in States	Interest payments, pensions, and salaries; they comprise between 30 and 32% of State revenue receipts
Union Budget 2025–26 capex	Capital expenditure ₹11.2 lakh crore; effective capital expenditure ₹15.5 lakh crore
Private consumption share	Private consumption close to 60% of GDP
Trends	Uneven income growth; rapid expansion of unsecured retail credit despite improved borrower profiles; volatile and compressed net financial savings