Capex Heavy Lifting Again Left For The Fag End

At the start of the third quarter, the finance ministry reportedly directed various departments and ministries to push capital expenditure to avoid the bunching up of expenses in the final quarter of the financial year. While this directive had little impact in September and October, it took full effect in December, when capital expenditure surged nearly 3.5 times.

Come January, capital expenditure figures declined again on a sequential basis, leading to the annual ritual of heavy spending in the last two months, especially in March.

Capital expenditure stood at ₹720 billion in January, down from ₹1.72 trillion in December but up from ₹476 billion in the year-ago period. The April-January capital expenditure at ₹7.57 trillion accounted for 74.4% of the full-year revised target, leaving February and March for significant spending, much like the previous years.

Going by the revised capex aim of ₹10.18 trillion, the government will have to spend ₹2.61 trillion in last two month of the financial year. In 2023-24, it had spent ₹1.42 trillion on capex in March, 15% of the full year spend.  

Fiscal Deficit
The central government’s Fiscal Deficit stood at ₹11.7 trillion in the first eleven months of the financial year, 74.5% of the revised estimate for the full year, according to data released by the Controller General of Accounts. In contrast, the April-January deficit as a percentage of the full-year estimate was 63.6% in 2023-24.

The Union Budget, presented on February 1, revised the 2024-25 fiscal deficit to ₹15.69 trillion, or 4.8% of GDP, reducing it by 10 basis points from the initial estimate of 4.9%.

The government’s April-January net tax revenue grew just 1.3% to ₹19.04 trillion, primarily due to substantial payments made to states.

The Centre makes devolution payments to states in 14 installments annually, leading to significant payouts in two months of the year.

The first fat cheque was made out in October (₹1.78 trillion), and another, it seems, in January. The Centre’s devolution to states stood at ₹1.73 trillion in January, compared to an average monthly payout of ₹1 trillion so far in the financial year.