Capturing India’s state infrastructure spending boom via high-frequency proxies

Government spending is increasingly driving economic growth for India, given tariff and energy headwinds. A key segment of the economy and lever for policy is “public sector undertakings” (PSUs) – government-controlled corporations active in sectors ranging from defense to energy.

Recent and ongoing megaprojects involving PSUs include a flagship rural water program, new rail corridors (including India’s first bullet train), the North East Gas Grid and the final segments of the Delhi-Mumbai expressway.

PSU spending does not show up in central ministry budgets, but we have combined it with official government spending in our chart. We can see an increased correlation with national electricity demand starting in late 2025.(Energy consumption and industrial production have long tracked each other in India’s economy.)