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Informist, Friday, Feb. 7, 2025

--Govt source: No reason to believe FY25 revised capex aim will be missed

--Govt source: State capex loan uptake better in FY2 than last year

NEW DELHI – The finance ministry does not expect any deviation in the 2024-25 (Apr-Mar) capital expenditure from the revised estimate given in Budget for FY26, a senior official said Friday. The revised capital expenditure for FY25 is INR 927 billion lower than the Budget estimate of INR 11.11 trillion.

The Budget presented on Saturday projected the central government's capital expenditure for the next financial year starting April at INR 11.21 trillion, up 10.1% from the revised estimate of INR 10.18 trillion for FY25. The official said the government capital expenditure on railway projects and road sector is well on track, while efforts are on to bolster spending in the defence sector.

In Apr-Dec, the government's capital expenditure was at INR 6.85 trillion, up 1.7% on year. Effectively, this means the government needs to spend INR 4.36 trillion in the remaining three months of the fiscal to achieve the revised capital expenditure target. The Narendra Modi government ramped-up capital expenditure in the post-COVID-19 era to revive growth and crowd-in private investments.

However, there has been a slowdown in the government's infrastructure spending in the current financial year due to election-related restrictions. In the last six years, the government has increased capital expenditure by a little more than three times.

In the Budget, the government has also proposed an outlay of INR 1.5 trillion for the 50-year interest-free loans to states for capital expenditure and power sector reforms. States have done better than last year, the official said.

In the Budget, the government has revised the special assistance as loan to states for capital expenditure to INR 1.25 trillion from INR 1.50 trillion, proposed in the full year Budget for FY25. The official said it was revised downwards because a large portion of these loans are tied to various reform measures and states need to furnish proof of utilisation.

In January, Informist had reported citing government sources that the Centre released INR 1 trillion to states till Jan. 23 under the scheme.  End

Reported by Sagar Sen and Krity Ambey

Edited by Akul Nishant Akhoury

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