Centre's capex spending dropped 35% in February, shows CGA data

Capex spend of Rs 2 trillion needed in March to meet FY25 revised estimate

 

The Centre’s capital expenditure (capex) for February 2025 contracted by 35 per cent year-on-year (Y-o-Y), with the overall spend for April-February of the current financial year (FY25) standing at 79.7 per cent of the revised estimate (RE) against 85 per cent in FY24, according to the latest Controller General of Accounts data. 

With just one month left until the close of FY25, the government is falling short of meeting its revised capex target by over ₹2 trillion. 

“We expect modest undershooting in capex relative to the target of ₹10.2 trillion as per the FY25 revised estimate. However, this would offset the miss on the disinvestment front, as well as any overshooting in the revenue expenditure,” said Aditi Nayar, chief economist, Icra. 

The pace of capital expenditure in the first half of the current financial year (H1FY25) had suffered on account of elections and the model code of conduct. The capex spend in January witnessed a Y-o-Y increase of over 51 per cent led by expenditure for Railways, transfers to states, and capital outlay on defence services. 

 

The government’s fiscal deficit amounted to ₹13.5 trillion — 86 per cent of the revised estimate for April-February FY25 — lower than the ₹15 trillion recorded in the corresponding period of FY24. 

Nayar also pointed out that higher nominal GDP (gross domestic product) of ₹331 trillion as per the second advance estimates by the National Statistics Office implies that the fiscal deficit will be contained at 4.7 per cent of GDP in FY25, lower than the revised estimate of 4.8 per cent for the financial year. 

Gross tax collections for April-February FY25 increased by 11 per cent over FY24. While there was a 22 per cent increase in income tax collections, corporate tax collections rose by just 2 per cent during this period. Overall, the total revenue receipts were 81.2 per cent of the revised estimate for April-February FY25 against 82 per cent in the corresponding period of FY24. 

“While income tax collections need to rise by 6 per cent in March 2025 to meet the FY25 RE, corporate tax collections are required to grow by a steep 34.4 per cent in the month in Y-o-Y terms,”  Nayar added. 

Net tax revenues for the first 11 months of FY25 were 78.8 per cent of the revised estimate compared to 79.6 per cent in the April-February FY24 period.