NEW DELHI: An RBI report says welfare schemes announced by several state governments in their 2024-25 Budgets - including free electricity to agriculture and households, free transport, allowances to unemployed youth and monetary assistance to women - may divert resources away from critical social and economic infrastructure development.
The RBI’s report titled – Government Finances 2024-25: A Half-Yearly Review – noted a substantial drop in capex by states during the first half of the current fiscal.
The report cites the example of the Centre’s scheme – ‘Special Assistance to States for Capital Investment’– under which the expenditure has come down to Rs 30,040 crore during first half of FY25 as against Rs 53,541 crore during same period last year. On the positive side, the report says that states have seen growth in their revenue receipts during H1FY25 driven by growth in tax revenues.