To counter slowing capex, Centre nudges ministries to spend more, plans relaxations

People familiar with the matter also said that Centre's borrowing via government bonds is unlikely to be cut for the rest of the fiscal.

The Centre is likely to ease cash management guidelines for several ministries and departments in the last quarter of the current fiscal in a bid to arrest the slowdown in its expenditure and speed up capital spending, according to a senior government official.

They have also asked ministries to expedite their pace of spending in the current quarter in a bid to avoid bunch-up of expenditure during January-March of FY25, this official said.

"Several review meetings are going on, to keep up the pace of spending. This is in view to ensure that the Centre achieves the capex target laid out in FY25," the official added.

The Centre's cash management guidelines stipulates ministries to not exceed 33 percent and 15 percent of their Budget targets in expenditure in Q4 and the last month of a given financial year, respectively.

"We many not insist on departments to comply with cash management guidelines during Q4. But we also do not want a bunch up in the last quarter of the fiscal. We have already allowed departments to rollover their expenditure allocations from Q1 to Q2 and from Q2 to Q3, in a bid to ensure spending across the year, especially when it comes to capex," this official said, adding that visible progress in the pace of spending on government's spending on infrastructure is likely going ahead.

The official acknowledged that though general elections have had an impact on the pace of spending on infrastructure this fiscal, the government is committed to speed things up given that some critical ministries have already exceeded 50 percent of their allocated capex for the fiscal.

Efforts to push up expenditure comes at a time when capital spending has slowed in the first half of the current fiscal.

Capital expenditure reached only 37.3 percent of the full-year target of Rs 11.1 lakh crore, compared with the 49 percent in the first half of FY24.

The government's total spending is also lower on a year-on-year basis at 43.8 percent of the FY25 Budget target of Rs 48.2 lakh crore, compared with 47.1 percent in April-September of 2023.