Expenses incurred by states on capital projects have risen 17 per cent between FY15 and FY19 from Rs 2.6 trillion to Rs 4.9 trillion.
The expenditure is concentrated primarily on economic services that accounted for around 70 per cent of the spending followed by social services (25 per cent) and general services (five per cent), data from the Centre for Monitoring Indian Economy (CMIE) showed.
Among states, Goa takes the highest share in capital outlay as percentage of total expenditure in FY19 at 25 per cent. Odisha, Uttar Pradesh and Assam were the other key spending states whose capital expenditure had a share of 20 per cent, 20 per cent and 19 per cent respectively as a proportion of their total spending. Punjab languished at the bottom with a share of only five per cent.
In FY19, the expenditure incurred towards capital projects by states at the consolidated level has been at 14.2 per cent of total expenditure, higher than the 13.3 per cent witnessed in FY15. This was, however, marginally lower than the 14.3 per cent witnessed in FY17. The increase however has not been very significant reflecting partly the pressure that states confront when balancing their budgets where they tend to restrict discretionary expenditure to meet the Fiscal Responsibility & Budget Management (FRBM) norms.
A study by CARE Ratings notes that at the state level, there has been a focus on creation of capital assets. Taking FY15 as the base year, 14 out of 22 states have committed higher expenditure towards capital outlay.
Uttar Pradesh, Maharashtra, Karnataka, Bihar, Gujarat, Madhya Pradesh,Telangana, Tamil Nadu, West Bengal
and Odisha have emerged as top 10 states contributing towards the total capital expenditure. Together, they account for 73 per cent of the combined Capex (Capital expenditure) undertaken by all the states.
Although Uttar Pradesh contributes the highest in the total Capex undertaken by states collectively, its share has declined from 20 per cent to 18 per cent during FY15-FY19 (Revised Estimates). Likewise, the share of Gujarat in total Capex has declined by three per cent and Tamil Nadu by one per cent. On the other hand, there has been an increase in the share of Maharashtra, Madhya Pradesh, West Bengal and Odisha in the total Capex by one per cent each during the period.
Telangana's share in the combined Capex has increased by two per cent during the period under review.
Having said that, states faced constraints in offering full thrust on capital expenditure on account of limited fiscal space available with them since they had to stick to fiscal consolidation norms and allocate more funds on Ujjwal Discom Assurance Yojana (UDAY).
A sector-wise break down of expenditure reveals that transport accounted for nearly 25 per cent of the Capex undertaken at the consolidated level followed by irrigation & flood control (22 per cent) and energy (10 per cent). While transport was the first priority for nearly 13 states and one Union territory, irrigation figured as the topmost priority for six states during the cumulative period of FY15-19.