Govt's FY25 capital expenditure may surpass RE of Rs 10.18 trillion

The government is confident of surpassing the revised estimates (RE) for capital expenditure (capex) of ₹10.18 trillion for FY25 based on the advance numbers, two top government officials said.

 

“The numbers we have received so far, even though not for the full financial year, indicate that we are likely to exceed the revised target of capex,” one of the government officials said.

 

The data released by the Controller General of Accounts (CGA) for April-February FY25 showed that the government is falling short of meeting its revised capex target by over ₹2 trillion for the full financial year.

 

To meet the RE would require a 44 per cent year-on-year (Y-o-Y) increase in capex.

 

The Centre’s capex for February 2025 contracted by 35 per cent Y-o-Y with the overall spend for the April-February FY25 period at 79.7 per cent of the RE. This is against 85 per cent last year, according to the latest CGA data. 

 

The pace of capex in the first half of the current financial year had suffered on account of elections and the model code of conduct.

 

The government had revised downwards its capex estimate by about ₹93,000 crore compared to the Budget Estimate (BE) for FY25. The capex allocation for FY26 has seen an increase of less than 1 per cent.

 

Defending the government position on capital expenditure, Finance Minister Nirmala Sitharaman had recently told Parliament that the government had not slowed down its capex push.

 

She had said, “Capital expenditure has not been cut at all. From ₹11.11 trillion in the FY25 Budget, capex allocation has gone up to ₹11.21 trillion in FY26. Capital assistance to states has also gone up proportionately.”

 

Experts feel that even with focus on fiscal consolidation, the government has to continue pushing capex, which has multiplier effects on the economy, in order to achieve the next leg of gross domestic product (GDP) growth.

 

“If the government’s investment expenditure falls short of the revised estimates, which were themselves significantly lower than the budget estimates of ₹11.1 trillion, achieving the implied fourth quarter GDP growth of 7.6 per cent (6.5 per cent growth in FY25) may become challenging,” D K Srivastava, chief policy advisor, EY India said in the March edition of EY Economy Watch.