NEW DELHI: States capital expenditure likely rose by a third on year in the first eleven months of 2023-24 compared with a 12% rise in the year-ago period, aided by their robust revenue growth and the Centre’s interest-free capex loans.
A review of the finances of 18 states- Tamil Nadu, Uttar Pradesh, Madhya Pradesh, Bihar, West Bengal, Andhra Pradesh, Haryana, Karnataka, Kerala, Maharashtra, Odisha, Punjab, Rajasthan, Uttarakhand, Telangana, Chattisgarh, Jharkhand and Himachal Pradesh- by FE showed that their capex in April-February of FY24 was up 33% on year at Rs 4.8 trillion.
Besides frontloaded tax devolution, interest-free loans from the Centre helped the states increase their capex. In April-February of FY24, the Centre provided around Rs 95,000 crore in 50-year interest-free loans to all states for asset creation.
Real GDP growth in Q3FY24 was a surprising 8.4% on year, which was largely driven by higher gross fixed capital formation at 10.6% on year due to the Centre, states and CPSEs’ thrust on capex.
During April-February of FY24, Uttar Pradesh (UP) was the biggest investor with Rs 86,505 crore compared with Rs 61,309 crore in the year-ago period. UP was followed by Madya Pradesh with Rs 49,961 crore (Rs 36,746 crore in the year-ago period) and Maharashtra with Rs 43,623 crore (Rs 32,708 crore).
The 18 states under review reported a 17% growth in their tax revenues in April-February of FY24 at Rs 23.7 trillion compared with the 16% growth recorded in the corresponding period of the previous year.
The borrowings of these states rose 19% on year to Rs 5.54 trillion in April-February of FY24 as against a 7% growth in the year-ago period.
Even as capex surged, the states’ revenue spending was contained with about a 10% annual increase in April-February of FY24 compared with 12% in the year-ago period.
All states in aggregate invested Rs 6.82 trillion in FY23 compared with 5.75 trillion in FY22, Rs 4.57 trillion in FY21 and Rs 4.6 trillion in FY20.
In the FY24 revised estimate, the Centre enhanced the revenue expenditure outlay to Rs 35.4 trillion for the year compared with Rs 35 trillion in BE while the outlay for capex was lowered to Rs 9.5 trillion from Rs 10 trillion in budget estimate as some departments could not spend fully. The Centre’s capex has exceeded the Centre’s FY24RE while revenue expenditure was contained at below the RE.
Source: The Financial Express