Effective state capital expenditure in FY24 will be double than budgeted: Kerala FM

Kerala finance minister K N Balagopal. (File image)

Despite the budget figures showing a decline of 4.6 percent year-on-year in Kerala’s capital expenditure (capex) for FY24, the effective capex will be almost double of that on the back of spending by independent agencies and panchayats, state Finance Minister KN Balagopal said.

“Our capital expenditure is more than last year. Kerala Infrastructure Investment Fund Board (KIIFB) will likely spend around Rs 9,000 crore next year. The effective capital expenditure will be double the budget figures because KIIFB's kitty is independent. In the budget, we are not calculating our local bodies expenditure; Rs 8000 crore will be spent by panchayats,” Balagopal told Moneycontrol in a video interview.

State capex has been budgeted to decline to Rs 167.28 billion in FY24, a fall of 4.6 percent y-o-y over FY23.

“The capital expenditure portion has not been reduced in the 2023 budget. For the centrally aided projects, the Centre is now directly transferring via direct benefit transfer. So, it is not reflected in our capital expenditure. Earlier that fund used to come to the state exchequer. That amount for FY24 is around Rs 1,000 crore,” he said.

The actual capex could also be higher than the budgeted capex as the union budget has been incentivising state governments to step up their capex. The union budget has allocated Rs 1.3 trillion as interest-free loans for states to step up their capex in FY24. In FY23, the allocation for interest-free loans for states was at Rs 1 trillion.

“We are using the interest-free loan for capex from the Union government. Last year too, we fully utilised it last year as well,” Balagopal said.

The minister said that the capital expenditure in Kerala is much more than the expenditure of many of the states.
“In the next budget, we will be giving effective capital expenditure for the year under a new head,” he said.