Slowing capex: Focus more on growth dynamics than changing target norms

Patterns of capital expenditure have a bearing on economic growth. With their huge spending power, states have as big a role in economic development as the Union government

A slowdown in the Union government’s capital expenditure is not only evident but it has already raised doubts over the achievability of the target of spending Rs 11.11 trillion, as budgeted for 2024-25. By way of comfort, however, officials in the Union finance ministry have indicated that the sharp fall in capital expenditure in the first half of the year should be corrected in the second half and annual expenditure could be slightly higher than in 2023-24.

 

Remember that the Centre’s capital expenditure last year was estimated at Rs 9.48 trillion, representing a rise of 28 per cent over that