The Finance Ministry will potentially reach the set target of Rs 10 lakh crore, the nation’s record high budgeted capital expenditure target, in the current financial year. The ministry is planning to spend at least 60 per cent of the total expenditure target in the April-September period of the current fiscal year, 2023-24, a top government official has revealed.
According to the report by Moneycontrol, the official noted, “Capex is doing quite well. In Q1 (April-June), capex spending was close to 28 percent. Q2 capital expenditure utilisation is also doing well. In H1, the government will be looking at achieving a capex spend of more than 50 percent, hoping to touch 60 percent.”
The government has utilised about 28 per cent of the total capital expenditure target in the first half of the current fiscal year, worth Rs 2.78 lakh crore, a significant increase from Rs 1.75 lakh crore spent for the same period last year, based on the data given by the Controller General of Accounts.
The official further revealed that in order to display a visible growth momentum in the upcoming elections next year, the central government is frontloading the capital expenditure in the April-September period.
The report noted that the frontloading of capex will help the government promote and strengthen growth to compensate for the slowdown in private investment in the face of weak global demand and the lag in the export markets.
Finance Minister Nirmala Sitharaman had announced in her budget presentation that the capital expenditure for the current fiscal year will be increased by 33 per cent, setting a record Rs 10 trillion aside for infrastructure development, accounting for about 3.3 per cent of the total GDP. To achieve the same target, the ministries have been given a free hand this year. They have been allowed to spend under zero cash management guidelines or quarterly spending restrictions, the report noted.
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The official stated that the government plans to have no savings from the capex this year and rather expects the ministries and states to absorb the extra expenditure. In the previous fiscal year, capital expenditure fell short of the target by a small margin. While the capex for FY23 was Rs 7.28 lakh crore, the budgeted capex was Rs 7.5 lakh crore.
A big part of infrastructure growth is comprised of railways and road expansion. These projects are expected to boost economic growth, create employment and strengthen the economy. About 8 per cent of the GDP is accounted for by this sector and more than 40 million people are employed through the development of this sector. Therefore, it is expected that the additional capex in the current fiscal year can be absorbed by the railway and road expansions, the report added.
Further, states have also been given an increased capex allocation of Rs 1.3 trillion, up by Rs 30,000 crore from the previous year.