The Centre is confident of meeting its record Rs 10-lakh-crore capital expenditure target for 2023-24, Finance Secretary TV Somanathan said on February 1.
Doubts were raised over the government’s ability to meet its capex aim for next year after the estimate for 2022-23 was cut to Rs 7.28 lakh crore from Rs 7.5 lakh crore. Somanathan, however, said the deviation from the budget estimate for this year has been due to states falling short.
The Centre’s Budget estimate of Rs 7.5 lakh crore for this year’s capex included a Rs 1 lakh crore, 50-year, interest-free loan to states.
“The central capital expenditure is going to exceed the budget estimates. State capital expenditure is not expected to reach the Rs 1 lakh crore figure because some portions of the state capital investment scheme have reform conditions. So, some states have not been able to meet some of the conditions,” Somanathan told reporters in the post-budget press conference.
Next year’s figure of Rs 10 lakh crore presents an even bigger challenge, with the budget estimate 37.4 percent higher than the revised estimate for 2022-23. But Somanathan expressed confidence.
“Railways have enough projects to absorb the additional capital expenditure. Highways, too, have adequate projects running to absorb this capital expenditure,” he said.
“The other big item on the Centre’s side is petroleum capital expenditure which is for retro-fitting of refineries to meet emission standards and pollution standards and partly for augmenting our strategic reserves,” he added.
On whether states will be able to spend the Rs 1.3 lakh crore that has been allocated for them under the Centre’s capex – up from Rs 1 lakh crore this year – the finance secretary said that while that might be a challenge, states were “gearing up” for it.
“The two years of this (interest free capex loans) experiment has helped them to improve their spending capacity and we also see an uptick in the second half of this year on the state capital expenditure. So, I am reasonably confident that the states will absorb the Rs 1.3 lakh crore that has been provided,” he said.
The Centre’s capex push has come at a time when the private investment cycle has been subdued. However, Chief Economic Adviser V Anantha Nageswaran said there were “very clear signs” of a revival in private capex “both in terms of intent and actual spend”.
“In the first half of 2020-21, based on quarterly earnings reports filed by listed companies, the capital expenditure was Rs 2.1 lakh crore which increased to Rs 2.4 lakh crore in the first half of 2021-22, and in 2022-23, it has gone up to Rs 3.3 lakh crore,” Nageswaran told reporters.
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