NEW DELHI: States’ capital expenditure likely fell by around 17% on year in the first four months of the current financial year, prolonging the moderation across the public sector capex space.
As the impact of general elections on project implementations lingered on, the capex by the central public sector enterprises including departmental agencies (CPSEs) fell by 16% on year in aggregate in April-July 2024 while the Centre’s capex fell by 17.6% during the period.
A review of the finances of 18 states by FE, showed that their capex in April-July of FY25 declined 17% on year to Rs 1.2 lakh crore compared with Rs 1.46 lakh crore (annual growth of 60%) in the year-ago period.
The states reviewed were Gujarat, Uttar Pradesh, Madhya Pradesh, Andhra Pradesh, Maharashtra, Tamil Nadu, West Bengal, Bihar, Haryana, Kerala, Odisha, Punjab, Rajasthan, Telangana, Chattisgarh, Jharkhand, Uttarakhand and Himachal Pradesh.
Sensing the resource crunch of the states, the Centre frontloaded tax devolution to states by releasing two instalments amounting to Rs 1,39,750 crore on June 10 for the month, instead of one regular instalment. The Centre may soon release another extra monthly tax devolution to states as well as fast-track release of Rs 1.5 trillion interest-free capex loans.
The 18 states under review reported a 16% growth in their tax revenues in April-July of FY25 at Rs 8 lakh crore compared with the 19% growth recorded in the year-ago period, a marginal improvement compared with Q1FY25.
These states’ borrowings fell 11% on year to Rs 1.73 lakh crore in April-July of FY25 as against a 39% growth in the year-ago period.
The states under review reported a 9% annual increase in revenue expenditure in the first four months of FY25 to Rs 10.54 lakh crore compared with the 8% growth seen in the year-ago period.
On Tuesday, Finance Minister Nirmala Sitharaman exhorted central ministries to expedite capital expenditure and make up for the shortfalls in the first quarter and the second quarter targets in the third quarter of the current financial year itself.
Source: The Financial Express
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