Capex in Q1 could be close to Rs 1.5 trillion

The Centre’s capital expenditure (capex) outlay for the April-June quarter (first quarter, or Q1) of 2022-23 (FY23) could be close to Rs 1.5 trillion, Business Standard has learnt.

As a percentage of full-year capex Budget Estimates (BE) of Rs 7.5 trillion, this could be at similar levels to the trends in the past few fiscal years.

It is in the July-September quarter (Q2) of FY23 that capex is expected to pick up, when a bulk of the long-term capex loans to states are expected to be expended.

The data on Q1 fiscal deficit will be released later this month by the Controller General of Accounts.

Senior officials said that the finance ministry is satisfied so far with the pace of capex by various infrastructure (infra) ministries.

The constant monitoring of big-ticket infra projects shows that the money is being spent effectively.

“The constant monitoring of the national infrastructure pipeline projects through PM GatiShakti has ensured speedy utilisation of capex funds.

"The line ministries are also submitting their plans on time for project clearances,” said a senior government official.

For 2021-22 (FY22), Q1FY23 capex came in at Rs 1.1 trillion, around 20 per cent of the FY22 capex target of Rs 5.5 trillion.

A Rs 1.5-trillion capex outlay in Q1 will be at the same levels as a percentage of BE of Rs 7.5 trillion.

Of this amount, Rs 1 trillion is meant as 50-year, interest-free loans to states for their capex needs.

The official quoted above reiterated what Finance Minister Nirmala Sitharaman had told Business Standard in early July.

In an extensive interview, she had said that the entire Rs 1 trillion could be given to states in Q2FY23 itself.

“Many states are ready with their plans to spend the capex on greenfield/brownfield projects.

"The rules for distributing the Rs 1-trillion loan were framed by late April and states brought their projects for evaluation in May.

"This Rs 1-trillion amount is yet to be picked up by states, but I am absolutely confident that it will be picked up before the end of the second quarter  itself,” she said.

As the economy comes out of two years of the Covid-19 pandemic, the Centre has made capex spending on high-multiplier infra projects the cornerstone of its revival plans, and is sticking to it in the current scenario of growth being impacted by global headwinds.

“The route we have chosen and the one we are sticking with is capex.

"Even during the pandemic, we adopted this method of spending on capital assets, and made sure economic revival happened.

"States really showed that they had the absorptive capacity,” Sitharaman had said.

On Tuesday, the International Monetary Fund slashed India’s growth forecast for FY23 by 80 basis points to 7.4 per cent, citing less-than-favourable external conditions and rapid policy tightening by the central bank.

Even then, India is expected to be the fastest-growing major economy in the world.