Centre spends 85% of FY24 capex target at ₹8.05 lakh cr till Feb

The Union government has spent ₹8.05 lakh crore on capital expenditure till February against the revised estimates of ₹9.49 lakh crore for 2023-24. The amount utilised by the Centre till the month is up 36.38% compared with expenditure on capital formation worth ₹5,90,227 crore by the Centre till February, FY23.

After briefly getting affected due to heavy monsoon in the country in July and August last year, execution of formation work gathered pace in September. In the month of February this year, the Centre utilised ₹84,426 crore compared with ₹20,335 crore in February last year, indicating a faster pace of approvals and implementation ahead of the Lok Sabha elections.

The ministry of road transport and highways and railway ministry have done the bulk of the expenditure given the higher allocation made to them. Other ministries like telecom and defence services too have contributed to the overall capex tally for the current financial year.

Till February this year, the ministry of road transport and highways has utilised funds worth ₹2,38,074 crore, compared with ₹1,95,484 crore till the same month last year. Till February, The ministry has spent 90% of the revised estimate worth ₹2,64,525 crore for the current financial year.

The momentum is likely to continue in the current financial year too. ICRA is of the view that road execution will witness a growth of 5-8% to 12,500-13,000 km, after recording a robust expansion of around 20% in FY24 on the back of a healthy pipeline of projects, increased capital outlay by the government of India (GoI) and focus on completion of projects by the ministry. ICRA noted in its quarterly update on domestic road sector issued on April 16 that road execution had been impacted in H1 FY2024 on account of the prolonged monsoon in certain geographies, which affected productive days, resulting in muted growth during that period.

The railway ministry too has exhibited a robust performance on capex utilisation in FY24. Till February, the ministry spent 91% of the revised estimate on FY24 capex at ₹2,19,031 crore. This is up 49% from the capex of 1,47,028 crore done by the ministry till February last year.

A push to the economy via capital formation has remained the top priority for the government since 2021. In the interim budget finance minister Nirmala Sitharaman has provided a target of capex to the tune of ₹11,11,111 crore in FY24 and in the ongoing election campaign too infrastructure is the key promise of the government along with Viksit Bharat goal for the country by 2047.