‘Budget capex not as high as it sounds’

Amid FY23 Union Budget’s focus on investments, leading domestic credit rating agency Crisil on Wednesday said that the capital expenditure is “not as high as it sounds”.

It, however, was quick to add that considering that governments usually tend to cut capex during a crisis, the government has maintained its focus on growth-spurring initiatives. The agency said, if one excludes the Rs 1 lakh crore of loans to states for capex included in the headline figure of Rs 7.50 lakh crore or 2.91 per cent, the actual spend in FY23, will go down to 2.58 per cent of GDP, which is barely at par with the revised estimate of FY22. 

The report pointed out that the overall number showing a rise has been ‘offset’ through a reduction in internal and extra budgetary resources (IEBR), which funds capex of central public sector enterprises (CPSEs). IEBR has been budgeted at 1.82 per cent of GDP for the next fiscal, much lower than the prepandemic average (fiscals 2018-20) of 3.33 per cent, it said, attributing the same to poor capex execution by CPSEs lately.

The overall central capex for FY22 would remain intact at 5.96 per cent of GDP, the same as prepandemic average between 2018-20. Many quarters had hailed Finance Minister Nirmala Sitharaman for her budget that mentioned an over 35 per cent jump in capex for FY23, to help revive growth. Additionally, on the revised estimates for FY22, showing a rise in capex to 2.60 per cent from the budget estimate of 2.39 per cent, the Crisil report said this is due to a onetime expenditure of Rs 51,971 crore towards Air India’s liabilities.