Aided by interest-free loans from the Centre, capital expenditure by states jumped by 40% on year in the first nine months of the current financial year compared with a 7% rise in the year-ago period.These states — Uttar Pradesh, Tamil Nadu, Madhya Pradesh, Bihar, Gujarat, West Bengal, Andhra Pradesh, Haryana, Karnataka, Kerala, Maharashtra, Odisha, Punjab, Rajasthan, Assam, Uttarakhand, Telangana, Chattisgarh and Jharkhand — reported Rs 4.14-trillion investment in April-December 2024 against Rs 2.96 trillion a year ago. In April-December this year, the Centre provided around Rs 61,500 crore in long-term loans to these states for asset creation.
In terms of quantum, UP was the biggest investor with `68,993 crore in April-December 2024 compared with `43,071 crore a year ago. Madhya Pradesh followed with `38,366 crore (`25,797 crore in the year-ago period) and Gujarat with `32,555 crore (`21,588 crore.These 19 states reported a 14% growth in their tax revenues in April-December 2024 at `19.87 trillion, upon the 26% growth recorded in the corresponding period of the previous year. Borrowings of these states rose 34% on year to `5.1 trillion in April-December of FY24 against a 22% decline in the year-ago period.
Even as capex surged, the states’ revenue spending was contained with about a 9% annual increase in April-December of FY24 compared with 13% in the year-ago period.The capital formation in recent years was led by the public sector, mainly the central government, state governments and state-run enterprises.As per the first advance estimate of national accounts released real GDP is estimated to show a strong growth of 7.3% in FY24. Among demand side components, GDP growth is shown to be driven by investments as measured by gross fixed capital formation (GFCF), which is likely to show the highest growth of 10.3%.The central government’s capex expanded by 37.5% in April-December of FY24, marginally higher than the required growth rate to meet the fiscal’s target.
As expected, the capex allocation was moderated to `9.5 trillion in FY24RE from FY24BE of `10 trillion due to lower utilisation by states from a special capex loan facility of `1.3 trillion and halving of capital infusion in state-run oil marketing companies. Even then, the FY24 capex works out to be over 28% from the actual of FY23.