No question of cuts, capex hiked to `11.21 lakh cr for FY26: Sitharaman

She was replying to Chidambaram’s question on why the Central government cut capital expenditure from `11.11 lakh crore to `10,18,429 crore. He also sought to know why the assistance to states was cut from `3,90,778 crore to `2,99,891 crore. “I have added the two, together you have cut about 1.8 lakh crore,” Chidambaram said.

Sitharaman also said there has been an increase in the release of loans to states since the introduction of the scheme for interest-free 50-year special assistance to states for capital expenditure in 2020-21.

In 2020-21, the approval was for `9,912 crore, and the actual release was `11,830 crore. Similarly in 2021-22, `15,928 crore was approved but `14,186 crore was released. In 2022-23, `95,147 crore was approved and `81,195 crore was released. In 2023-24, `1,27,492 crore was approved and `1,00,954 crore was released, Sitharaman said.

She added that for FY 2024-25, which ended on Monday, `1,53,673 crore was approved and up to March 26, 2025, `1,46, 362 crore was released to states.

As per the latest official data released by Controller General of Accounts (CGA) last week, Centre’s capex declined 35 per cent year-on-year to Rs 54,528 crore in February. Cumulatively, for April-February 2024-25, capex stood at Rs 8.12 lakh crore, up 0.8 per cent from the year-ago period. As per the Budget presented in Parliament on February 1, capex was estimated to be Rs 10.18 lakh crore (Revised Estimates) and Rs 11.11 lakh crore (Budget Estimates) for financial year 2024-25. For 2025-26, it is estimated to be Rs 11.21 lakh crore (Budget Estimates).

Later in the day, the two leaders engaged further on this issue on social media platform X. Sitharaman said Chidambaram’s claims of a ‘cut’ in capital expenditure are misleading and based on flawed comparisons. She said Chidambaram’s selective arithmetic and flawed comparisons between BE and RE of the same year may serve political rhetoric but do little for informed public discourse.

“Budget Estimates (BE) are prepared before the financial year begins and naturally evolve into Revised Estimates (RE) based on expenditure trends, implementation capacity, and emerging priorities. This is standard practice in public finance.”

“In FY 2024-25, capital expenditure was influenced by several factors: the Model Code of Conduct during General Elections, extreme weather events, and lower-than-expected spending by states and certain central agencies. Additionally, many states failed to submit utilisation certificates, making further fund releases imprudent. Clearly, the revisions were not due to fiscal constraints,” she said.

Comparing the capex numbers, Sitharaman said it has risen from FY24 BE at Rs 10.01 lakh crore to FY25 BE at Rs 11.11 lakh crore, an increase of 11.11 per cent.

“The BE (‘25-26) for capex stands at Rs 11.21 lakh crore, higher than BE 24-25. Similarly, the RE (‘23-24) was estimated at Rs 9.50 lakh crore and the RE (‘24-25) is estimated at Rs 10.18 lakh crore. This clearly indicates an increase of 7.3 per cent. There has been no cut in the capex of the central government,” she said.

Chidambaram also posted on X after this, saying that Union FM has given a “laboured and tortuous explanation” to a simple question on the difference between BE for capex in 2024-25 and the estimate at the end of year. “FM could have listed the reasons and it is for the people to decide whether the reasons are acceptable or not. Instead, she has questioned the very comparison of BE and RE. I am astonished that the Hon’ble FM should say that comparison of BE and RE is ‘flawed’. If BE and RE are not comparable, why list the two numbers side-by-side on the same page in the Budget documents?,” he said.

Citing the example of fiscal deficit, he said all estimates are placed side-by-side in Budget documents for comparison. “Why does Hon’ble FM list the BE of fiscal deficit side-by-side with the RE of fiscal deficit? In order to show the world that the government has ‘improved’ upon the original estimate of the fiscal deficit. The same logic applies to all estimates. As far as capital expenditure in 2024-25 is concerned, the numbers conclusively prove that there was a reduction (cut) in 2024-25,” he said.