 "capital expenditure, capex")
Amid tepid growth in central government capital expenditure (capex) during April-July, ministries such as housing (at 35 per cent), road (34 per cent), railways (34 per cent) along with departments of health (32 per cent) and atomic energy (30 per cent) were outliers in spending. They spent 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 (DoT), which spent only one per cent of the budget estimates (BE). This is against 44 per cent in the corresponding period last year, according to data sourced from the Controller General of Accounts.
The Ministry of Development of North East Region also spent only 4 per cent of the BE during April-July compared to 10 per cent during the same period in the preceding year. This analysis takes into account capital expenditure allocation of over Rs 2,000 crore to ministries and departments for FY25.
Transfer to states for capex also slowed to 12 per cent of BE for the same period compared to 24 per cent in the corresponding period last year.
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Government final consumption expenditure — including capital expenditure of both Centre and states — contracted 0.2 per cent during the June quarter. This was due to the model code of conduct in force on account of the general elections. It contributed to the deceleration of GDP growth during the quarter to 6.7 per cent.
The ministries which lead capital expenditure include railways and road transport & highways that spent 34 per cent of the BE each.
During the corresponding period of the preceding year, the railways ministry had spent 47 per cent of the budgetary allocation and road ministry spent 40 per cent.
“A 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 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 had met officials of the road, transport & highways ministry and the DoT to review plans for their budgeted capex.
The Finance Ministry would be reviewing this with all ministries with significant capital outlays in the coming days.
The Union Budget presented by Sitharaman on July 23 has kept the capex estimates unchanged from the interim Budget levels at Rs 11.1 trillion.
Of this, the road transport and highways ministry has a capex allocation of over Rs 2.7 trillion and railways over Rs 2.5 trillion.
The government has been advancing release of funds to states also to assist them in stepping up their capex outlays.
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