Maharashtra continues to be a dominant force in India’s capital expenditure (capex) landscape, maintaining a strong lead over other states such as Tamil Nadu and Gujarat. Despite facing political challenges, the state has demonstrated resilience and is increasingly becoming a magnet for significant investments, especially in manufacturing and infrastructure. According to Mahesh Vyas, CEO of CMIE, while Maharashtra experienced a slight slowdown in project completions in FY23, the state has shown signs of recovery in FY24-25, with investments in key infrastructure projects picking up momentum.
A notable driving force behind Maharashtra’s infrastructure boom is its strong road development programme, funded largely through government spending. Anil Yadav, Director at IRB Infrastructure, pointed to the hybrid annuity model (HAM) and engineering procurement and construction (EPC) projects as key contributors to the state’s success. Despite facing political instability, Yadav remains confident in the future growth prospects, especially with the stabilization of the government, which he believes will facilitate smoother execution of ongoing and upcoming infrastructure initiatives. Moreover, Rajashree Murkute of CareEdge Ratings highlighted that Maharashtra continues to lead in both the announcement and completion of major projects. In the first half of FY25, the state’s share of announced projects surged to 35%, a significant increase from 20% in FY24, underscoring its attractiveness for investors, particularly in the manufacturing and infrastructure sectors.
However, the broader national capex cycle has shown signs of slowing down. Vyas noted a decrease in new investment proposals and project completions, particularly during the September quarter. This trend indicates lower-than-expected investments and delays in the completion of several infrastructure projects. Murkute concurred, pointing to a 15% to 10.5% year-on-year contraction in both central and state capex, a sign that the country’s infrastructure development may face a slower pace in the near term. While there are emerging green shoots, the overall capex cycle has not matched the robust momentum seen in previous years, raising concerns about the future pace of infrastructure growth. Despite these challenges, Maharashtra’s consistent focus on infrastructure and manufacturing, coupled with strategic investments, is positioning the state as a key economic player in India’s long-term growth trajectory. As the state rebounds from short-term setbacks, it remains well-poised to maintain its leadership in the country’s economic landscape.
