Capital expenditure of states could cross 3% of gross state domestic product in the year 2023 -- 24 following the Centre's capital spending push in the annual budget, according to an ET analysis of 16 states. The analysis showed that the capex of the 16 states, which account for 80% of the GDP and the total expenditure of the states, could be about 20% higher than in the current financial year. The combined capex of the 16 states and the Centre is expected to be 5.9% of the GDP, as they could spend close to 18 lakh crore on capital activities. In the pre-Covid 19 2019 -- 20 spending of the Centre and these 16 states was 4% of GDP. In the 2023 -- 24 budget, the Centre increased capex 37% and allocated Rs 3.7 lakh crore for grants to states for the creation of capital assets, an increase of 13% year-on-year. The Centre is expected to spend 3.3% of GDP on capital expenditure next fiscal, which is slightly higher than the states' spending. Since the pandemic, the trend has changed as states' capex as a proportion of GDP has been higher than the Centre's. The revenue deficit should be zero, as states should do 3%, as per the Medium Term Fiscal Framework. Historically, they used to do more because so much of the funding came from the central government, said NR Bhanumurthy, vice chancellor, Dr BR Ambedkar School of Economics University, Bengaluru. In terms of total budget outlay, the share of capex for the 16 states will be 16.2% in 2023 -- 24. The share for the Centre is expected to be 22.2%. Since 2020-21, the Centre's capex as a proportion of its total expenditure has been higher than that of the states. The share of states' capex in total expenditure was 15.9% from 2014 -- 15 to 2019 -- 20, the Centre's share was a lower 13.1%. Since 2020-21, the Centre's average capex share has been 16.8%, while that of states has been 14%. The states' willingness to go for easy avenues for spending may cause the lower allocation for capex, according to Bhanumurthy. It is an easy way to spend because some states are going for the old pension system. Capex spending is difficult, he said. He said that the pull back from the Centre is a significant reason that states have been asked to spend more on the social sector due to higher devolution. The central government has withdrawn from some of the areas, which may have resulted in larger committed expenditure.