The Centre’s Capital Expenditure (CAPEX) got a year-end boost in FY22 due to huge funds released to the railways and defence sector, enabling it to end the year with CAPEX spending close to the Revised Estimate (RE) of Rs.6.03 trillion. In the last financial year, the Centre’s total expenditure was around the RE of Rs.37.7 trillion.
A government official stated that railways and defence spent a lot of funds in March, yet they could not fully utilise their allocated budget in FY22. The total budgetary CAPEX in the year was about Rs.5.9 trillion.
According to the Controller General of Accounts (CGA) data released on 31 March for the April-February period, the CAPEX in March was over Rs.1 trillion. The CGA data showed that the Centre’s budget CAPEX was at Rs.4.85 trillion or 80.6% of the RE for the entire year in the April-February period of the previous financial year.
The revenue expenditure stood at Rs.26.59 trillion or 83.9% of the RE for FY22 in April-January last financial year compared with 80.1% of the corresponding target in the year-ago period. The government official stated that the total expenditure for FY22 was close to the RE because the revenue expenditure was robust.
The Centre’s fiscal deficit may be slightly lower than the FY22 RE of 6.9% of GDP since the second advance estimate projected nominal GDP growth of 19.4% in FY22 compared with 17.6% in the RE. The Centre’s net tax receipts have beaten RE by Rs.1.2 trillion. But, the postponement of LIC IPO resulted in the non-tax receipts being lower than RE by Rs.60,000 crore.
Last week, the rating agency, ICRA, stated that they expect the CAPEX to have undershot the FY22 RE by Rs.600 billion, suggesting a total buffer of Rs.0.8 trillion for higher revenue expenditure, smaller than the size of the third supplementary demand for grants, i.e. Rs.1.1 trillion. Overall, the rating agency did not expect the FY22 fiscal deficit to deviate meaningfully from the RE.
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