Spending by states, which will get 13% of the Centre’s FY24 budgetary capex outlay in the form of long-term, interest-free loans for asset creation, will be more closely monitored, they added.
The ministry is planning more frequent meetings with various departments to review progress, as it feels intended benefits from the capex push won’t accrue unless funds are actually spent and, that too, on time.
“Capex is being monitored very closely at the highest level in the ministry (by the finance minister). This is in addition to the regular meetings held by senior officials from the departments of economic affairs and expenditure,” a senior finance ministry official told ET.
The central government has allocated as much as ₹ 10 lakh crore for capex for FY24, on top of a record ₹7.28 lakh crore this fiscal. Of this, states will get ₹1.3 lakh crore next fiscal.
“Such a huge chunk of money has never been allocated for capex, so fund utilisation needs special attention. Departments should get cracking, else the intended benefits won’t accrue,” said the official. A large chunk of capex has been earmarked for the ministries of railways and roads, given their greater appetite and execution capabilities. “Some states have to be more proactive as well,” he added.
Tighter monitoring comes after the revised capex estimate of ₹7.28 lakh crore for this fiscal fell short of the budget estimate of ₹7.5 lakh crore. While central government departments have improved their capex fund utilisation in the wake of constant nudge by the finance ministry, states have struggled to use up their quota this fiscal (₹1 lakh crore), especially the chunk of funds that is tied to reform measures to be undertaken by them.
At Rs 5 lakh crore, a half of the total capex outlay for FY24 has been earmarked for two ministries-the railways and the road transport & highways.
In the aftermath of the pandemic, the central government has raised its reliance on budgetary capex to spur growth, betting big on its high multiplier effect. The capex was raised by 27% on-year in FY21, 39% in FY22 (including equity infusion into Air India Assets Holding) and 23% (revised estimate) in FY23-way above the increase in overall budget size of the relevant years. The capex outlay for FY24, too, has been raised 37.4% from the revised estimate for this fiscal, way above the 7.5% rise in the overall spending. Consequently, capex would constitute a record 22.2% of the total budgetary spending in FY24, against 16.2% this fiscal and just 12% in FY14.
Persistent focus on capex assumes significance, as India’s growth is estimated to slow down to 6.1% in FY24 from 6.8% this fiscal, according to the International Monetary Fund. The country, however, will still remain the world’s fastest-growing major economy.