Tough FY21: States to buck trend, report capex decline

By Prasanta Sahu12 days ago

AD

Capital expenditure by state governments will likely shrink in FY21, bucking the trend of robust growth in fixed asset creation reported by most of them in recent years.

The 16 states reviewed by FE reported combined capital expenditure of Rs 2.16 lakh crore in April-February of FY21, compared with Rs 2.56 lakh crore in the year-ago period.

Capital expenditure by state governments will likely shrink in FY21, bucking the trend of robust growth in fixed asset creation reported by most of them in recent years. According to an FE review of budgetary spending by 16 major states, their capex was down 16% on year in April-February, compared with a negative growth of 5% in FY20.

According to RBI’s customary study of state finances, the total capex roll-out by all states stood at Rs 4.97 lakh crore in FY20, down 20% from the budget estimate of Rs 6.22 lakh crore the previous year, but it was still up 2% on year.

The 16 states reviewed by FE reported combined capital expenditure of Rs 2.16 lakh crore in April-February of FY21, compared with Rs 2.56 lakh crore in the year-ago period. This means that against their combined annual capex target of Rs 4.7 lakh crore for the year, these states achieved only a dismal 46% in the first 11 months of FY21.

Clearly, acute revenue constraints and Covid-related welfare spend have forced these states to cut the capex. The 16 states reviewed are Uttar Pradesh, West Bengal, Madhya Pradesh, Gujarat, Andhra Pradesh, Karnataka, Rajasthan, Odisha, Telangana, Kerala, Maharashtra, Punjab, Chhattisgarh, Haryana, Jharkhand and Uttarakhand.

Continue read on financialexpress.com