NEW DELHI: States could be well short of their Rs 6 lakh-crore capital expenditure (capex) target for the current financial year.
Referring to the country’s top 21 states aiming for an ambitious 36% jump in capital outlay over the revised estimates of FY21 (Rs 4.4 lakh crore), Crisil Ratings said that the figure seems “overstated” in the current scenario citing multiple reasons.
Twenty-one states - accounting for more than 90% of aggregate state capital expenditure - spent 82% of the budgeted capital outlay in FY21, posting a modest 11% rise year-on-year over a low base of FY20 (which saw a marked dip in actual capex due to post-election lethargy in many states and at the Centre).
“We expect a similar 11-13% rise in capex to Rs 4.8-5.1 lakh crore this fiscal too, assuming that states spend 80-85% of the budgeted estimate,” Crisil noted.
The agency reasoned that for one, there is a discernible shift in the sectors to where the money is flowing. From a steady increase in water supply and urban transport outlays earlier, more funds were directed towards roads last fiscal, i.e. the pandemic year.
Notably, the achievement ratio for roads at 96% far surpasses 82-83% for water, urban transport, and irrigation.
Also, a larger part of funds earmarked for capex was diverted for Covid-related expenses and these trends are expected to continue this fiscal.