Centre’s FY25 revised capex may miss the target by around Rs 35,000 crore

According to data available until February, the capex lagged behind at Rs 8.1 lakh crore for 2024-25, implying the Centre would have to spend Rs 2.1 lakh crore in March 2025 to reach the revised target for 2024-25.

The Centre’s capital expenditure may likely fall short of its revised annual target of Rs 10.18 lakh crore for the previous financial year by around Rs 35,000 crore, sources have told Moneycontrol.

"The slowdown in spending by key infrastructure ministries like highways, atomic energy, and housing and urban affairs due to the general elections in the first half of last year has led to a scenario where capital expenditure target may be slightly undershot," a senior government official told Moneycontrol.

Another government official cited preparations leading to the general elections in the first half of the previous year as the reason behind Centre’s capex losing pace. "We will try and at least get close to the revised target for FY25." The official acknowledged that FY25 capex effectively began in August, due to general elections between April 19 and June 1, 2024, which led to a slowdown in spending on infrastructure.

The first government official, cited earlier, told Moneycontrol that the largest miss on capex in FY25 is expected to be on account of a spending slowdown in roads and highway projects, followed by housing and atomic energy.

While, the Ministry of Road Transport and Highways (MoRTH) may miss its capex target of Rs 1.64 lakh crore by around Rs 25,000 crore in FY25, atomic energy and housing ministries are expected to report a shortfall of Rs 5,000 crore each, the official said.

According to data available until February 2025, the capex lagged behind at Rs 8.1 lakh crore for 2024-25, implying the Centre would have to spend Rs 2.1 lakh crore in March 2025 to reach the revised target for 2024-25.

For February 2025 alone, Centre’s capex contracted by 35.4 percent year-on-year to Rs 54,528 crore.

The capital expenditure target for FY25 was reduced to Rs 10.18 lakh crore from Rs 11.11 lakh crore earlier, and the Union Budget had pegged it at Rs 11.21 lakh crore for FY26, almost flat on-year versus the initial aim.

Emails sent to MoRTH, and ministries of housing, and atomic energy were unanswered till the time of publishing.

Aditi Nayar, chief economist at ICRA said she expects capex to modestly below the revised target for the fiscal gone by.

"We expect modest undershooting in capex relative to the target of Rs 10.2 lakh crore as per the FY25 revised estimate. However, this would offset the miss on the disinvestment front, as well as any overshooting in the revenue expenditure,” Nayar said.