NEW DELHI: Capital expenditure by 18 state governments whose finances were reviewed surged by 56% on year in the first half of the current financial year compared with just a 2% rise in the year-ago period. This was supported by capex loans from the Centre.
Excluding loans from the Centre, the capex of these 18 big states rose by a robust 26% in H1FY24 over the year-ago period.
These states – Madhya Pradesh, Bihar, Gujarat, West Bengal, Andhra Pradesh, Haryana, Karnataka, Kerala, Maharashtra, Odisha, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh, Uttarakhand, Telangana, Chattisgarh and Jharkhand- reported Rs 2.57 trillion in H1FY24 against Rs 1.65 trillion in the year-ago period. In H1FY24, the Centre provided around Rs 0.5 trillion in loans to these states.
Keeping in mind the fund crunch faced by states, the Centre has increased the allocation for the Scheme for Special Assistance to States for Capital Investments to Rs 1.3 trillion in FY24 BE from the Rs 0.8 trillion loans disbursed to them in FY23. The enhanced allocation is aimed at spreading asset creation across the country to boost economic growth and the creation of jobs.
Election-bound Telangana reported a whopping 190% increase in annual capex in H1FY24, followed by Andhra Pradesh with 142%, Odisha (up 87%) and Uttar Pradesh (85%). However, Karnataka saw a 32% decline in capex during the period.
These 18 states reported a 15% growth in their tax revenues in April-September 2024 at Rs 12.55 trillion, upon the 32% growth recorded in the corresponding period of the previous year.
The borrowings of these states rose 49% on year to Rs 3.39 trillion in April-September FY24 as against a 29% decline in the year-ago period, reflecting trailing revenues vis-a-vis aggregate target. Even as capex surged, the states’ revenue spending was contained with about a 10% annual increase in H1FY24 compared with 15% in the year-ago period.
The Centre has raised the capital expenditure target by 37% on year to a whopping Rs 10 trillion (including Rs 1.3 trillion capex loans to states) for FY24 to continue the public investment-led economic recovery post-pandemic. The Centre has clocked 43% on-year growth in capex in H1FY24 and achieved around 49% of its annual capex goal in April-September of the current financial year.
Source: The Financial Express