Tamil Nadu has spent ₹8,548.25 crore towards capital expenditure so far in fiscal 2022-23 (till July), which is 19.85% of the budgeted amount of ₹43,072.81 crore, according to the provisional figures from the Comptroller and Auditor-General (CAG).
This is higher than the ₹4,527.12 crore spent during the same period in fiscal 2021-22, which was 9.92% of the budgeted amount.
Capital expenditure includes capital outlay, which leads to the creation of assets such as schools, hospitals, and roads and bridges and helps in improving economic activity and generating employment. It also includes repayment of loans.
Madan Sabnavis, chief economist, Bank of Baroda, said the total projected capital expenditure for a set of 26 States, including such major States as Maharashtra, Tamil Nadu, Gujarat, Uttar Pradesh, is ₹6.92 lakh crore in fiscal 2023. The Centre’s projected capital expenditure is ₹7.5 lakh crore (including the ₹1.40 lakh crore of loans to be given to the States), he pointed out.
Mr. Sabnavis said the Centre was more aggressive than the States in terms of capital spending for the period April-July 2022. For the first four months (April-July) this fiscal, the Centre had spent ₹2.08 lakh crore, 27.8% of the budgeted amount. However, the States were slower, spending ₹1.01 lakh crore, or 14.7% of the budgeted amount, he noted. Hence, there is considerable slack which needs to be made up in the remaining eight months of the year.
Overall capex is concentrated in Uttar Pradesh, Maharashtra, Karnataka, Tamil Nadu, Gujarat, Madhya Pradesh, Odisha and Rajasthan, which individually have a share of above 5% each and together account for 61.2% of the total capex for 2023, he added.
Mr. Sabnavis pointed out that these States need to perform well and meet their targets to ensure that capex is on track.
He said two biggest States in terms of budgeted capex, Uttar Pradesh and Maharashtra, have been lagging so far. Out of the budgeted capex of ₹1.24 lakh crore for fiscal 2023, Uttar Pradesh has spent only 10.3% so far, while Maharashtra has spent only ₹7,560 crore of the budgeted amount of ₹64,065 crore, according to the data shared by Mr. Sabnavis.
“There has been a tendency even in the past for the States to go slow on capex in the initial months and accelerate subsequently when a clearer picture of their fiscal balances is known. Therefore, the last quarter could be a busy period for the States in reckoning their capex,” he said.
With buoyant GST collections for both the Centre and the States this year, the capital spending needs an equal push from both, which is critical for growth, Mr. Sabnavis said.
He pointed out that as per the revised estimates for fiscal 2022, Tamil Nadu, Karnataka, Gujarat, Madhya Pradesh, Odisha and West Bengal had missed their capital spending targets.
In his budget speech for 2022-23, Tamil Nadu Finance Minister Palanivel Thiaga Rajan said there was a delay in the execution of capital works due to unprecedented rain and floods, as well as the restrictions imposed to control the Omicron variant of the novel coronavirus that causes COVID-19. As a result, the total capital expenditure was ₹37,936.23 crore in the revised estimates for 2022, as against ₹42,180.97 crore in the budgeted estimates.
The possibility of slippage cannot be ruled out if larger States do not expedite projects in the next 8 months, Mr. Sabnavis said.
