Centre set for a spending spree

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The Centre had spent Rs 99,104 crore from the capital account (plan and non-plan expenditure) in the first half of last fiscal, which amounted to nearly 43.7 per cent of the Budget estimate for capital expenditure of Rs 2,26,780 crore, according to data available with the Controller General of Accounts (CGA). In the first two months of 2015-16, capital expenditure (plan and non-plan expenditure) by the government was Rs 37,743 crore as against Rs 36,754 crore between April and May 2014.

The finance ministry is hopeful that capital spending will witness a significant rise in the current quarter as more projects get approved and Budget announcements are implemented.

Additionally, the government is also banking on public sector firms to rev up spending. “Many of them have been sitting on idle cash and not using it for productive purpose. But this year, it is expected that they will take up investments,” said the official.

The Union Budget 2015-16 had significantly hiked the resources available from public enterprises to Rs 3,17,888 crore this fiscal as against the revised estimate of Rs 2,37,045 crore in 2014-15.

Finance ministry’s chief economic adviser Arvind Subramanian had initially proposed the plan to hike up public investments to boost growth in the Mid-Year Economic Review 2014-15, which was later accepted and announced in the Union Budget.

Experts said a clearer picture would emerge over the next few months as much of the capital spending in the first two months of 2015-16 was mostly what had been postponed in the last fiscal.

“Adequate capital expenditure has not been budgetted for the kind of stimulus that the government wants to give. Further, indirect tax receipts will now come under a cloud due to the lowering global crude oil prices and this in turn would pressure spending plans for the rest of the year,” said DK Srivastava, chief policy adviser, Ernst and Young.