Saturday, 05 Oct, 2024
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In a bid to stimulate private sector investment and drive economic growth, the Ministry of Statistics and Programme Implementation (MoSPI) is set to unveil its inaugural annual survey on private sector capital expenditure next month.
Finance Minister Nirmala Sitharaman earlier this month met officials from the Ministry of Road Transport & Highways and the Department of Telecommunications (DoT) to review their capital expenditure (capex) plans, aiming to accelerate capex utilisation across ministries. The FM urged them to establish quarterly targets and ensure their timely completion. Additionally, she emphasised the importance of speeding up project implementation, as outlined in a statement from the finance ministry.
The Ministry of Road Transport and Highways has seen its capex allocation rise by 90 per cent, from Rs 1.42 lakh crore in FY20 to Rs 2.72 lakh crore in FY25. The ministry is also focused on attracting private investment through several initiatives, alongside efforts to meet its asset recycling goals. In comparison, the Ministry of Communication’s estimated capex allocation for FY25 is Rs 28,835 crore. More significantly, these increased allocations reflect the government’s emphasis on infrastructure development and public-private partnerships to drive economic growth.
Notably, the Budget 2024-25 presented by FM Sitharaman on July 23 has maintained the capex estimate at Rs 11.1 lakh crore, aligning with the interim Budget figures.
Amid overall subdued growth in the Centre’s capex from April to July, certain ministries and departments demonstrated higher spending rates. According to government data, the Ministry of Housing (35 per cent), Road Transport (34 per cent), Railways (34 per cent), Health (32 per cent), and Atomic Energy (30 per cent) notably exceeded the average capital expenditure growth rate of 24 per cent.
In contrast, the DoT substantially lagged, spending just 1 per cent of its budget estimates (BE) compared to 44 per cent during the same period last year, as reported by the Controller General of Accounts.
The Ministry of Statistics and Programme Implementation (MoSPI) is poised launch its inaugural annual survey on private sector capex next month as part of the Centre’s efforts to stimulate increased private sector investment. The inaugural edition of the annual survey will begin in October and is likely to be completed by December. The results are expected to be made public by February next year.
Worth mentioning here is that the survey comes as the government ramps up its efforts to stimulate economic growth through increased public capex, amid a sluggish recovery in private investment. The Economic Survey 2023-24, released in July, noted some encouraging signs in private capex but recommended caution as the situation evolves.
(Source: Budget documents)
The Ministry of Development of Northeast Region disbursed only 4 per cent of its BE from April to July, a significant decline from 10 per cent during the same period last year. This analysis includes to a capex budget exceeding Rs 2,000 crore allocated for ministries and departments in FY25. Additionally, capital transfers to states slowed to 12 per cent of BE during this timeframe, compared to 24 per cent last year. Government final consumption expenditure, encompassing both central and state capital outlays, contracted by 0.2 per cent in the June quarter due to the general elections’ model code of conduct. This contributed to a slowdown in GDP (gross domestic product) growth to 6.7 per cent for the quarter.
The railways and the road ministry are leading in capex, each utilising 34 per cent of their budget estimates. This shows a decline from the previous year, when the railways used 47 per cent and the road ministry used 40 per cent. Experts are od the view that a significant portion of capex remains concentrated in these sectors.
After a subdued start in the first quarter, capex increased in July, with expectations for continued strength in the coming months. The Centre’s capex in Q1 was Rs 1.8 lakh crore, down 33 per cent from Rs 2.7 lakh crore in the same period last year.
