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Amid tepid growth in central government capital expenditure (capex) during the April-July period, ministries such as housing (35 per cent), road (34 per cent), and railways (34 per cent), along with departments of health (32 per cent) and atomic energy (30 per cent), stood as outliers, spending more than the average of 24 per cent overall capex during the four-month period, government data showed.
However, the departments which dragged the capex growth for the same period include the Department of Telecommunications, which spent only 1 per cent of the budget estimates (BE) against 44 per cent in the corresponding period last year, according to the data sourced from the Controller General of Accounts. The Ministry of Development of the North East Region also spent only 4 per cent of the BE during the April-July period compared to 10 per cent during the same period in the preceding year.
This analysis takes into account capital expenditure allocations of over Rs 2,000 crore to ministries and departments for FY25.
Transfers to states for capex also slowed to 12 per cent of the budget estimate for the same period, compared to 24 per cent in the corresponding period last year.
Government final consumption expenditure, including capital expenditure of both the Centre and states, contracted 0.2 per cent during the June quarter due to the model code of conduct in force on account of the general elections, which contributed to the deceleration of GDP growth during the quarter to 6.7 per cent.
The ministries leading capital expenditure include the Ministries of Railways and Road Transport & Highways, which spent 34 per cent of the budget estimates each. In the corresponding period in the preceding year, the Railways Ministry had spent 47 per cent of the budgetary allocation and the Road Ministry 40 per cent.
“Large part of the capex is concentrated in the roads and railways sector. Government has certain projects in mind. In the first quarter the attention span was lower. Capex has picked up in July. It will not be an issue in the next seven months,” Madan Sabnavis, chief economist at Bank of Baroda, said.
The Centre’s capex in Q1 stood at Rs 1.8 trillion, nearly 33 per cent lower than the Rs 2.7 trillion during the corresponding period last year. The Finance Ministry has relaxed capital expenditure norms and kick-started quarterly review meetings to make up for the lag in government spending due to the election season.
Finance Minister Nirmala Sitharaman on September 3 met with officials of the Road Transport & Highways Ministry and the Department of Telecommunications to review the plans for their budgeted capex.
The Finance Ministry would be reviewing the same with all ministries with significant capital outlays in the coming days.
The Union Budget presented by Sitharaman on July 23 has kept the capital expenditure estimate unchanged from the interim budget levels at Rs 11.1 trillion. Of this, the Road Transport and Highways Ministry has a capital expenditure allocation of over Rs 2.7 trillion and Railways over Rs 2.5 trillion.
The government has been making advance releases of funds to the states also to assist them in stepping up their capex outlays.
First Published: Sep 11 2024 | 8:02 PM IS
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