Data caFE: Govt’s spending push

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Published: July 3, 2015 12:54:00 AM

The government has front-loaded capital expenditure in H1FY16 and has focused on sectors like roads, rural development...

The government has front-loaded capital expenditure in H1FY16 and has focused on sectors like roads, rural development (RD), agriculture and human resource development (HRD). Plan expenditure, a proxy for capital spending, is up, at 13% of that budgeted for FY16, in April and May as compared to 10% of the FY15 plan expenditure the same time last year. On a year-on-year basis, while non-plan expenditure declined 9%, plan spending grew 4%, driven by a 32% increase in the capital component. The largest increase has been in roads, where plan spending is up by a whopping 1,275% y-o-y in FY16 till May, with 22% of the FY16 plan budget expenditure for the sector already spent. It was just 2.7% of the budget estimate in the same period last year. The RD ministry spent 26% of its FY16 budget in the first two months and agriculture and HRD ministries 7.9% and 22%, respectively.

The outlook for the roads sector sees marked improvement as the National Highways Authority of India has awarded 3,000 km of projects in FY15 versus 1,165 km in FY14, and is targeting 9,000 km for FY16. The government also increased allocation for roads in the FY16 budget by 45%. A Deutsche Bank report says the plan expenditure momentum in the first two months of FY16 will have a strong impact on macroeconomic data and corporate earnings.

spending

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