Updated: December 18, 2021 7:26:21 am
With pre-budget meetings already underway, Union Finance minister Nirmala Sitharaman has pulled up infrastructure ministries for their “sluggish performance” on capital expenditure and asked them to step up productive spending to stimulate the economy.
Admitting that private investments are yet to pick pace, Sitharaman has been keen on front-loading capital spending to aid a fledgling economic recovery. In one such letter dated December 6 to Railway Minister Ashwini Vaishnaw, reviewed by The Indian Express, she wrote, “It is noted that the capex performance of your ministry till November 2021 was only 61% of the budget target.”
The total budgeted capex for Railways in 2021-22 is Rs 1,07,100 crore; this means Railways could spend only about Rs 65,331 crore in the first eight months of the current financial year. Till October-end (the first seven months), the Railways’ capex was Rs 60,434 crore or 56 per cent of the Budget Estimate.
“Hon’ble Prime Minister had also prompted us in the Cabinet meetings to step-up the capex significantly. Considering the slow pace of expenditure, I request you to hold weekly review meetings from now onwards to ensure that at least 75% of the budget targets are met by December 2021 and 100% of the targets are met by 15 March 2022,” she wrote to Vaishnaw.
It is not just the Railways where capital spending has been lackadaisical. Latest data available with the Controller General of Accounts show that capital expenditure in the first seven months of 2021-22 (April-October) was Rs 2,53,270 crore or 45.7 per cent of the Budget Estimate.
In her letter to Vaishnaw, Sitharaman noted, “For all infrastructure ministries put together, the numbers indicate continuation of sluggish performance.”
The Indian economy had clocked a growth rate of 8.4 per cent in July-September 2021 having contracted 7.4 per cent in the corresponding period the previous year. For the full year, the Reserve Bank of India estimates a growth rate of 9.5 per cent.
Referring to her previous letter more than two months back on September 29, she said, “… I had requested for front-loading of capital expenditure (capex) to stimulate the economy through public spending on capex, especially when the private investments into the economy are yet to pick up. This point has been well encapsulated in the recent report on CAPEX.”
The CGA data shows that capital expenditure in the first seven months – April-October 2021 – in some big spend ministries including power (Rs 109 crore or 7 per cent), telecom (Rs 3,158 crore or 12 per cent), water resources (13 per cent or Rs 43 crore), health and family welfare (Rs 1,211 crore or 48 per cent), and housing and urban affairs (Rs 13,816 crore or 54 per cent) too have not gathered pace. Certain ministries such as youth affairs and sports, Micro Small and Medium Enterprises, and animal husbandry and dairying, have already made any capital expenditure.
A government source said Railway Board Chairman Suneet Sharma has directed all additional members of the board to begin close monitoring at all levels and sought weekly reports. When contacted, Railways Ministry spokesperson Rajeev Jain, said, “Our periodic review meetings have begun, and the ministry is well on course on this.”
On October 19, The Indian Express had reported that Cabinet Secretary Rajiv Gauba wrote to all secretaries on September 20 asking them to speed up spending, particularly capex. “Capital expenditure needs to be speeded up to meet the target for the current financial year. The progress in many ministries at the end of the first quarter of the financial year is not satisfactory,” he wrote. His letter followed a meeting the Prime Minister had with all secretaries on September 18.
When contacted, Road Transport and Highways Secretary Giridhar Armane said, the finance ministry was keen that infrastructure ministries spend as much as possible given the high Budget allocation for the year. “The Finance Minister took a review, and the PM also took a review last month of all infrastructure ministries. Till last month, our (Ministry of Road Transport and Highways) capex stood at 68 per cent and the Finance Minister has asked us to cover at least 75 per cent till December. I believe we will be doing slightly more than that by December end,” he said.
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