Defence, Railways lead capital expenditure drive, FY22 spend close to Revised Estimate

March capex above $1 trn, Centre’s total expenditure last fiscal at RE level

April 12, 2022 06:15 IST

Defence, Railways lead capital expenditure drive, FY22 spend close to Revised Estimate

As per the CGA data, the Centre’s budget capex stood at Rs 4.85 trillion or 80.6% of the RE for the full year, in April-February period of last financial year.

The Centre’s capital expenditure got an year-end boost in FY22, thanks to huge funds released to the defence sector and the Railways, enabling it close the year with capex not far away from the Revised Estimate (RE) of Rs 6.03 trillion, a senior official told FE. The total expenditure by the Centre in the last financial year was around the RE of Rs 37.7 trillion, the official added.

“Defence and Railways spent a lot of funds in March, yet they could not fully utilise the budget allocated to them in FY22. The total budgetary capex in the year was around Rs 5.9 trillion,” the official said.

Given the Controller General of Accounts (CGA) data released on March 31 for the April-February period, it is clear capital expenditure in March was over $ 1 trillion.

As per the CGA data, the Centre’s budget capex stood at Rs 4.85 trillion or 80.6% of the RE for the full year, in April-February period of last financial year.

This was against such capex being 92.4% of the corresponding target a year ago. Revenue expenditure was at Rs 26.59 trillion or 83.9% of the FY22RE in April-January last fiscal compared with 80.1% of the corresponding target in the year ago period. The official said total expenditure was close to the RE because revenue expenditure was robust.

The Centre’s fiscal deficit may turn out to be slightly lower than FY22RE of 6.9% of GDP, as the second advance estimate projected nominal GDP to grow by 19.4% in FY22 compared with 17.6% factored in the RE. The Centre’s net tax receipts is seen to have beaten RE by Rs 1.2 trillion. But the postponement of LIC IPO led to the non-tax receipts being lower than RE by Rs 60,000 crore.

“We expect capex to have undershot the FY22 RE by Rs 600 billion. This suggests a total buffer of Rs 0.8 trillion for higher revenue expenditure, which is smaller than the size of the third supplementary demand for grants (Rs 1.1 trillion). Overall, we do not expect the FY22 fiscal deficit to deviate meaningfully from the RE,” rating agency Icra said last week.