- विज्ञापन -
New Delhi: A report by Motilal Oswal indicates that the government may not meet its capital expenditure (capex) target for the financial year 2025. The report reveals that the total capital spending planned by the Centre, set at Rs 11.1 trillion for FY25, has decreased by 13.5% year-on-year (YoY) during the first half of the fiscal year.
Experts attribute this shortfall to the upcoming Lok Sabha elections, which have imposed a model code of conduct, limiting government spending to existing projects. In the first six months of FY25, the government has only managed to achieve 39.1% of its budgeted capital expenditure, raising concerns about the ability to meet the full-year target, as a significant increase in spending is necessary in the latter half of the year.
The report notes a mixed performance in capital expenditure across the quarters. While there was a notable 14.6% YoY increase in the second quarter of FY25, the first quarter saw a sharp decline of 35.4% YoY. To meet the annual target, capital spending must grow by an ambitious 50.5% YoY in the second half of the fiscal year, a feat that the report suggests may be challenging to achieve.
The government is likely to fall short of its FY25 capex target, as highlighted in the report. Over the past five years, capital expenditure has significantly increased, rising 3.3 times from Rs 3.4 trillion in FY20 to the Rs 11.1 trillion budgeted for FY25. Excluding loans and advances (L&As), the Centre’s capex for FY25 is estimated at Rs 9.2 trillion.
However, the government’s capex in the first half of FY25 fell by 13.5% YoY, reaching only 39.1% of the budget estimate, which is lower than the 50% achieved in the first half of the previous two years. This period recorded the lowest capex in a decade, aside from the COVID-19-impacted FY21.
This trend raises concerns about the government’s ability to meet its full-year capex target, particularly given the subdued spending momentum typical of an election year. Capital expenditure is vital for economic growth, as it supports infrastructure development and job creation. A significant shortfall could adversely affect growth projections and sectors reliant on government investment.
