© The Indian Express Pvt Ltd
Tags:
Journalism of Courage
Amid concerns over slow capital expenditure by departments and ministries so far this financial year, the Centre has directed them to speed up the pace of spending in the ongoing quarter “as much as possible”, a senior government official said. The government has nudged the ministries to expedite the pace of capital expenditure to avoid bunching up of capex in the January-March quarter, the official said, adding that the government may also relax the cash management limits for the last quarter.
The pace of capital expenditure has been slow this year, particularly coming in the backdrop of Lok Sabha elections. “Capital expenditure takes time to take place. The process of issuing tenders for projects takes time. Even though the core infrastructure ministries are picking up pace towards capex, the government wants the departments and ministries to speed up capital spending as much as possible. We encourage all departments and ministries to achieve the targets given to them,” the government official said.
As per the latest data by Controller General of Accounts, the Centre’s capital expenditure during September stood at Rs 1.14 lakh crore, down 2.4 per cent from the year-ago period. Cumulatively, during April-September, the first half of the financial year, capex was down 15.4 per cent year-on-year to Rs 4.15 lakh crore. The second half of the financial year will pose a challenge to the government as capex will have to grow by 52 per cent to achieve the FY25 Budget target of Rs 11.11 lakh crore.
Some departments and ministries have already taken a nod from the Finance Ministry to rollover their quarterly allocation for capital expenditure from one quarter to another post elections. “There are ministries which have asked us to allow spending of Q1 into Q2 and some have asked for rollover into Q3. They are the best judge on how to spend it and we are here to facilitate the spending. We encourage them to speed up spending in Q3,” the official said.
Since the election-induced slowdown in capex has resulted in rollover of spending allocation from the first quarter, the government may also consider relaxing the cash management limits for the last quarter to help ministries to release funds for schemes. As per the guidelines, the departments and ministries are required to not exceed 33 per cent and 15 per cent of the Budget targets in expenditure in Q4 and the last month of the financial year (March),respectively.
This also comes amid incipient signs of softening consumption demand, especially in urban areas, reflected in multiple high-frequency indicators and corroborated by the earnings guidance of consumer goods companies, that have raised concerns about a weakening of the growth momentum in the Indian economy.
Given the slower pace of public capex including the Centre and states, Finance Minister Nirmala Sitharaman had recently held review meetings with key ministries having significant budget capex outlays including the railways and roads ministries, urging them to meet the H1 capex shortfall in Q3FY25. The pre-budget consultations to finalise the revised estimates for FY25 and budget estimate for FY26 had begun with various departments and ministries on October 10 and concluded on November 11.
Most ministries have lagged behind in their capex spending this year, with their capital expenditure so far ranging between 30-40 per cent of the budget targets. Infrastructure-linked ministries have picked up pace, such as Ministry of Railways’ capex that has risen to over 54 per cent of the budget target during the first half of FY25, while capex of Ministry of Road Transport and Highways has risen 52 per cent of target, but are still lower than the year-ago utilisation levels of 59 per cent and 60 per cent, respectively.
