Government’s capital expenditure jumps 50 per cent in Apr-Sept 2022

NEW DELHI:  The government’s capital expenditure grew nearly 50% YoY in the first six months of the current financial year, keeping with its budget promise of increased spending on asset creation. Capital expenditure during the April-September 2022 period reached Rs 3.42 lakh crore compared to Rs 2.29 lakh crore in the corresponding period last year. 

The government has increased the outlay for capital expenditure in the Union Budget by 35.4% from Rs 5.54 lakh crore in FY22 to Rs 7.50 lakh crore in FY23.  However, the government may still be lagging behind in capex to meet its budget target.

As per Aditi Nayar, chief economist at ICRA, a 58% jump in capex in September has boosted the average capital spending of the government to nearly Rs 57,000 crore per month in the first half of the current financial year, but it is below the required monthly average of Rs 62,500 crore to meet the FY2023 budget estimate.

The government, however, continues to remain tight-fisted on revenue expenditures as these expenses rose only 7.5% year-on-year.  Revenue expenditure are routine expenses like payment of salary, interest, etc. Out of the total revenue expenditure, Rs 4,36,682 crore is on account of interest payments and Rs 1,98,879 crore is on account of major subsidies, as per the government release.

Total expenditure incurred during the April-September period stood at Rs 18,23,597 crore, 46.2% of the budgeted estimates 2022-23. Gross tax collection of the government rose by 17.5% in the first half of the financial year to Rs 13.9 lakh crore on the back of strong tax collections across direct and indirect taxes.