Budget 2019: Piyush Goyal may strive to get capital expenditure math right

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Updated: January 25, 2019 7:09:18 AM

Last year, NDA government was not able to spend Rs 36,000 crore allocated for capital expenditure despite personal monitoring of projects by Prime Minister Narendra Modi through PRAGATI meetings.

Budget 2019 Expectations: Piyush GoyalBudget 2019 Expectations: Piyush Goyal

Union Budget 2019: The interim Budget to be presented by Piyush Goyal is expected to come up with impressive capital expenditure figures to meet election year expectations, but it has to be seen if the government will manage to achieve the projections made in last year’s budget.

Former Finance minister Arun Jaitley had earlier this month made public the NDA government’s intention to allocate more money to important development schemes, even at the risk of breaching the fiscal deficit target. However, allocation of more money for capital expenditure may not automatically translate in more spending on that account which is an essential pre-condition of a growth oriented budget.

Jaitley was neither able to contain the revenue expenditure as stated in 2017-18 budget nor was he able to ensure that the money allocated for capital expenditure was fully utilised that year.

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The actual capital expenditure of union government was over Rs 2.84 lakh crore in FY 2016-17 against the budget estimate of Rs 2.45 lakh crore, showing a healthy increase of nearly 16%. However, the next year, capital expenditure of the central government, as shown in the revised estimates for FY 2017-18, came down by over 36,000 crore or nearly 12% in comparison with the budget estimates for that year.

The capital expenditure for FY 2017-18, as shown in the revised estimates in last year’s budget, was Rs 2.73 lakh crore. In fact it was not only lower than the budget projections made by Mr. Jaitley for that year but it was also 4% less than the actual capital expenditure of 2.84 lakh crore for the previous financial year 2016-17.

In last year’s budget, Arun Jaitley has once again projected the centre’s capital expenditure outlay for 2018-19 at around the same level of 2017-18, slightly above Rs. 3 lakh crore. However, any slippage in the capital expenditure spending on the lines of previous year will be a cause of concern for Prime Minister Modi’s developmental push in the crucial election year.

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