India Ratings sees marginal rise in States’ capex in FY24 to 2.8% of GSDP
- IBJ Bureau
- Apr 11, 2023
India Ratings on Monday said that share of combined capital expenditure (capex) of States in the Gross Domestic Product (GDP) might improve marginally to 2.8 per cent in FY24 from 2.5 per cent in FY23.
In accordance with the recommendations of the 15th Finance Commission, States were allowed a fiscal deficit of 4 per cent of their respective Gross State Domestic Product (GSDP) in FY23, of which 0.5 per cent was tied to power sector reforms. Notwithstanding this, the available fiscal space for undertaking incremental capex, an assessment of the provisional data for 26 States from the Comptroller and Auditor General (CAG) showed that he 26 States in aggregate had achieved 52 per cent of the FY23 budgeted capex during April-January FY23.
Only a handful of States – such as Kerala, Karnataka, Gujarat, Himachal Pradesh, Madhya Pradesh, Bihar and Odisha – had incurred capex in the range of 60 to 74 per cent of the FY23 budgeted estimate (BE) during April-January FY23, it said.
The States have borrowed considerably less than the budgeted gross market borrowings of around Rs 9 lakh crore for FY23. This indicates that the States have not utilised the additional fiscal space available for capex.
The Centre’s decision to consider off-Budget borrowings by State government entities in FY22 and FY23 as a part of States’ net borrowing ceiling for FY23 could have dented market borrowings by States.
The rating agency expects the gross market borrowings of States to be Rs 8 lakh crore in FY24 with net market borrowings projected at Rs 5.1 lakh crore.
The rating agency has revised the outlook on the finances of States to “neutral” for FY24 from “improving” in FY23.