Pet projects of the Modi govt ride the slow expenditure track in FY22

Despite the front-loading of expenditure several depts have been slow this year, impacting projects like National Infrastructure Pipeline, Jal Jeevan Mission, RoDTEP among others

Union Budget 2022-23 is in the making, and some complex math is probably being done in the corridors of the North Block. The last two Budgets were presented and implemented in the pandemic, and while the first one for FY21 clearly spent more than initially Budgeted, the intent for FY22 hasn't been much different.

What has the actual speed of expenditure of the government in this financial year been? The Controller General of Accounts’ data till November shows that against the total budgeted expenditure of Rs 34.8 trillion, about 60 per cent, or Rs 20.7 trillion has been spent. Of course, the additional spending to the tune of Rs 3 trillion, via the supplementary demands for grants, will get added to the spending matrix in the Revised Estimates. 

Front-loading of expenditure helps expedite spending, and improve cash flow to departments. But there are several departments and ministries which have been slow this year. Which are they, and in which areas has central government expenditure suffered this year?  

National Infrastructure Pipeline (NIP)

The grand project of the National Democratic Alliance government, the National Infrastructure Pipeline (NIP) got an allocation of Rs 44,700 crore, to be spent directly by the Department of Economic Affairs (DEA) in the Finance Ministry (MoF). Very few items of spending in the Budget get this kind of allocation under a single head. 

The DEA’s capital outlay for this year is Rs 56,500 crore, largely encompassing the NIP. Only 2 per cent, or Rs 1,150 crore has been spent till November 2021. Many departments are known to push through capex in the last month of the financial year (March), and DEA seems to be on the same track with regard to NIP this year. 

In fact, even in FY21, only Rs 8,300 crore of capital expenditure was spent by DEA (provisional actuals), against the Revised Estimates of Rs 17,300 crore. A sum of nearly Rs 8,000 crore was meant for NIP back then. 

Incentives to exporters

The MoF also allocated Rs 13,000 crore for RoDTEP, or Remission of Duties and Taxes on Exported Products, a scheme that incentivises exporters by zero-rating of exported items in the form of rebate.  

“[The] scheme is to be implemented by Customs [department] through a simplified IT system. Rebates will be issued in the form of a transferable duty credit/electronic scrip (e-scrip) which will be maintained in an electronic ledger by the Central Board of Indirect Taxes & Customs (CBIC),” the government said in August 2021. 

But the CBIC has spent only Rs 5,100 crore from its departmental allocation of close to Rs 20,100 crore for FY22 in the first eight months of the year. India’s exports have soared this year, with many months nearing all-time highs, and December 2021, actually registering highest ever exports. But the spending by CBIC, of which RoDTEP is a major head, has been weak till November. 

Tap water to all households

The government rebranded the National Rural Drinking Water Programme into a Jal Jeevan Mission in 2019. The scheme aims to provide potable drinking water taps to all households in the country. The allocations in the first two years were in the range of Rs 15,000 crore to Rs 20,000 crore annually.

In FY22, the Budget allocated a massive Rs 60,000 crore for the scheme (ministry Budget). Only a third, or close to Rs 18,400 crore has been spent till November 2021. This is a core electoral promise of the Modi government, which wants each and every house in India to be tap water equipped before the 2024 general elections to Parliament. 

Taxpayer funded telecom companies

There has hardly been a week when there is no news on the dynamic telecom sector. The government recently became the biggest shareholder in Vodafone Idea Ltd, India’s third biggest telco. But the Department of Telecommunications has been slow in spending this financial year till November. 

The DoT oversees the sector and spends on the national telcos BSNL and MTNL, apart from its commitment to strengthen communication networks in far flung areas in general. 

DoT’s capex plan includes two main heads. One, infusing capital in BSNL and MTNL, two state owned telecoms companies for strengthening their 4G networks worth Rs 20,500 crore. 

“BSNL is in the final stages of 4G POC. Government has allocated funds for BSNL to acquire 4G spectrum also. All these steps have enabled BSNL to survive through the highly competitive phase,” the government said in a recent release. 

But in the first eight months of 2021-22, the capex progress has been only 12 per cent: Rs 3,200 crore out of budgeted Rs 26,000 crore. It means BSNL and MTNL have not got the required infusion yet. 

Second item under capex is building optical fibre based fast network for defence services, for which, Rs 5,200 crore have been allocated. This too must have taken a big hit. 

On the revenue expenditure front, DoT has spent 53 per cent of the annual plan. Major items under DoT’s revenue expenditure are pensions to BSNL and MTNL employees (Rs 15,350 crore), adding telecom infra to rural areas through the Universal Service Obligation (USO) Fund (Rs 9,000 crore), and GST payment of BSNL and MTNL. 

The DoT fully spent the amount allocated to it in the Revised Estimates last financial year (2020-21). Capex, which was low at Rs 4,400 crore then, was increased six-fold in FY22 Budget. 

Digital India powerhouse

The Ministry of Electronics and Information Technology, which is spearheading digital payments, the use of Aadhaar in our everyday life, and the policy on data and privacy, is also a laggard in spending allocated money this year. 

The Digital India programme, which is a pet scheme of the government set into motion by PM Modi himself after demonetisation, was allocated Rs 6,800 crore in the FY22 Budget. Only a third of it is spent when two-thirds of the financial year is over (data till November 2021, essentially for the first eight of the 12 months in the financial year). 

Promotion of electronics and IT-related manufacturing takes up the biggest pie in MEITy spending, with the FY22 Budget allocating Rs 2,600 crore for it. It is followed by a special fund to promote digital payments worth Rs 1,500 crore. The government notified the scheme only recently, in mid-December 2021. The benefits of the scheme will now go to banks and financial institutions with retrospective effect. 

Other key shortfalls

The Ministry of Petroleum and Natural Gas has spent only 27 per cent of its allocation in the first eight months of FY22, largely owing to the discontinuation of subsidy to LPG users. 

Capital spending on the police administered by the Ministry of Home Affairs has been slow, with only a third of spending till November. In terms of revenue spending, which goes into the salaries and emoluments of Central Armed Police Forces among others, has been satisfactory, with Rs 68,000 crore of the budgeted Rs 94,000 crore spent till November.

The Ministry of Environment, Forests, and Climate Change has also seen slow spending, with one-third of the Budgeted amount spent. The biggest spending head under the green ministry is Rs 470 crore, meant to provide financial assistance to Pollution control Boards/Committees, funding to National Clean Air Programme (NCAP).

Transfers to union territories, especially the newly created Ladakh, and Andaman & Nicobar Islands have also fallen behind. 

Note: Large amounts, wherever mentioned, have been rounded off to the nearest 100