Tuesday, Jan 31, 2023

Big infra ministries push the pedal in capital spending in first five months

For Railways, 79% of spend in April-Aug was capex, for Road Transport & Highways 95%

The pace of spending by the Railways is also much higher than the government overall expenditure in the first five months this year. (Representational/File)

AS the economy picks up the thread post Covid-19, at least two big infrastructure ministries — Railways, and Road transport and Highways — have recorded a fast pace of spending in the first five months of the current financial year.

In fact, these two ministries account for nearly half (Rs 3.24 lakh crore) of the entire capital expenditure (Rs 7.50 lakh crore) budgeted for 2022-23. What is, however, of importance in their first five months’ spending pattern is that the bulk of it was capex — meaning expenditure that results is new asset creation or improving the quality of existing ones.

Of Rs 85,279 crore utilised by the Railways in April-August this year, 79 per cent or Rs 67,244.99 crore was capital spending. For Road Transport and Highways, 95 per cent of Rs 1.15 lakh crore total spending in the first five months was capital expenditure.

Just five ministries in the Union government account for 72 per cent of the total capex of Rs 7.50 lakh crore in 2022-23. These are: Road Transport and Highways (Rs 1.87 lakh crore), Defence (Rs 1.60 lakh crore), Railways (Rs 1.37 lakh crore), Telecommunications (Rs 54,150 crore), and Housing and Urban Affairs (Rs 27,341.01 crore).

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This suggests the government has pressed the pedal on public expenditure to give an impetus to growth since the private sector continues to be averse to invest.


Bunching expenditure is avoidable

While the CAG data shows high capex ministries are taking the lead in spending, several ministries with smaller outlays are lagging. Ten departments have utilised less than 10% of their allocated funds. This will force them to spend in the last few months hurting the quality of expenditure.

According to latest data available with the Controller General of Accounts (CGA), the Union Ministry of Railways led by Ashwini Vaishnaw has already utilisied 61 per cent of its annual budgetary allocation in the first five months; of the total allocation of Rs 1,40,367.13 crore allocated for the full year, it has spent Rs 85,279 crore during April-August 2022. This is substantially higher than last year’s; it had utilised only 29 per cent of the total allocation in the first five months in 2021-22.


The pace of spending by the Railways is also much higher than the government overall expenditure in the first five months this year. The government has utilised a little over one-third – Rs 13.90 lakh crore in April-August – of the total budgeted expenditure of Rs 39.44 lakh crore for the full year.


The Union Ministry of Road Transport and Highways (MoRTH) under Nitin Gadkari followed closely the Ministry of Railways in spending. It has utilised 58 per cent (or Rs 1.15 lakh crore in April-August) of its annual allocation of Rs 1.99 lakh crore for 2022-23. Though high, the MoRTH had spent a higher 66 per cent of its annual budget during the same period in 2021-22.

Apart from Railways and Road Transport and Highways, spending by the Rajnath Singh-led Ministry of Defence in the first five months as a percentage of total allocation is more than what it was in the corresponding period previous year. The Department of Telecommunications and the Ministry of Housing and Urban Affairs are lagging compared to their performance in the previous year, according to the CAG data.

Mansukh Mandaviya-led Ministry of Chemicals and Fertilizers has also utilised more than half its allocated expenditure for the year in the first five months. It has spent 57 per cent (or Rs 61,229.47 crore in the first five months) of its total outlay of Rs 1,07,715.38 crore for 2022-23.


The CGA data reveals that even after five months, at least 10 ministries or departments could not spend even a tenth of the total funds allocated to them for the full year. G Kishan Reddy-led Union Ministry of Tourism led this pack having utilised only 2 per cent (or Rs 41.79 crore) of its annual allocation of Rs 2,400 crore made in 2022-23.

The other nine are: Jyotiraditya Scindia-led Ministry of Civil Aviation and Reddy’s Ministry of Development of North East Region— 4 per cent each; Hardeep Puri’s Petroleum and Natural Gas, 5 per cent; Amit Shah-led Cooperation ministry, Dharmendra Pradhan’s Skill Development and Entrepreneurship ministry and Smriti Irani’s Women and Child Development ministry—6 per cent each; Parshottam Rupala-led Fisheries, Animal Husbandry and Dairying ministry 8 per cent; and Pashupati Kumar Paras-led Food Processing Industries and Raj Kumar Singh’s New and Renewable Energy ministry – 9 per cent each.

To improve the quality of expenditure, the Union Ministry of Finance advises all departments to spread their spending throughout the year instead of bunching it at the end. “Rush of expenditure, particularly in the closing months of the financial year, shall be regarded as a breach of financial propriety and shall be avoided. The Financial Advisers of the Ministries/ Departments shall ensure adherence to the stipulated Monthly Expenditure Plan and the guidelines issued in this regard by the Budget Division, Department of Economic Affairs, from time to time,” states the guidelines issued under the General Financial Rules by the Budget Division in the Union Ministry of Finance.

First published on: 10-10-2022 at 04:30 IST
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