The Centre’s drive to accelerate capital expenditure has begun to yield results with the asset-creating spending reaching around 25% of the annual target of Rs 10 trillion in the first quarter of the current financial year, sources said.
The Centre’s capex was 23.4% of the annual target of Rs 7.5 trillion in Q1FY23.
With half a dozen states going to assembly elections by 2023-end, the Union government has asked all ministries to accelerate capital expenditure and spending on Centrally Sponsored Schemes (CSS).
The idea is to maximise spending in the first half of the year so that at least 50% of the annual budget capex is implemented by September-end and 75% by December-end. In the last fiscal year, these figures were 45.7% and 65.4%, respectively.
The Centre has raised the capex target by 36% on-year to Rs 10 trillion (including Rs 1.3 trillion capex loans to states) for FY24 from Rs 7.36 trillion (including Rs 81,200 crore to states) in FY23, to continue the public investment-led economic recovery.
Assembly elections are due by December in Chhattisgarh, Madhya Pradesh, Rajasthan, Telangana, Tripura and Mizoram. The Code of Conduct could hit the implementation of schemes by the end of 2023, as the administration gets busy with election-related work.
The Centre has extended to the second quarter of this fiscal the exemption from cash control norms granted to its ministries, centrally-sponsored schemes and grants-in-aid in a bid to push capital expenditure. According to cash management guidelines, ministries were to attune bulk expenditure items to the monthly GST collection and quarterly advance tax payments for smooth exchequer control.
The government believes that investment and consumer momentum will underpin solid growth prospects in the current financial year.
The government’s revenue position is comfortable at the moment with buoyancy in both direct and indirect tax receipts, an official said.
Of the Rs 1.3-trillion grant-like special capex facility for states in FY24, the Centre has already approved over Rs 60,000 crore out of the untied Rs 1 trillion. Of this, over Rs 30,000 crore has already been released to states.