India’s capital expenditure decelerated by 12 per cent during April-November period, showing a sluggish pace of spending, data from Controller General of Accounts (CGA) showed on Tuesday. In the same period, fiscal deficit was down by nearly 6 per cent in absolute number, although it rose as a share of the budget estimate.

The government intends to spend ₹11.11 lakh crore as capital expenditure during FY2023-24. Data showed that actual expenditure during April-November period was over ₹5.13 lakh crore against ₹5.85 lakh crore during the corresponding period of the last fiscal. This marks a decline in the pace of spending, primarily due to the impact of the ‘Model Code of Conduct’ on account of General Elections during the April-June quarter this fiscal. Monsoon, too, had an impact on government’s investment in physical infrastructure.

On a month-on-month basis, capital expenditure rose by nearly 21 per cent in November compared to October. Experts feel the numbers indicate that it would be difficult to meet the budget estimates.

“The GoI’s capex needs to expand by 65 per cent YoY in December 2024-March 2025 or record a monthly run rate of ₹1.5 lakh crore, to meet the FY2025 RBE, which appears increasingly daunting. We are apprehensive that the capex target of ₹11.1 lakh crore for FY2025 will be missed by a margin of at least ₹1-1.5 lakh,” said Aditi Nayar, Chief Economist with ICRA.

Fiscal Deficit

Data also showed that fiscal deficit for April-November was ₹8.47 lakh crore or 52.5 per cent of the estimate for the financial year. It was ₹9.06 lakh crore or around 51 per cent during the corresponding period of the last fiscal.

Net tax receipts for the first eight months of the current financial year were at ₹14.43 lakh crore or 56 per cent of the annual target, compared with ₹14.36 lakh crore for the same period last year. Total government expenditure for the eight months was ₹27.41 lakh crore ( ₹26.52 lakh crore).

Some economists projected a narrower fiscal deficit than the target of 4.9 per cent of gross domestic product (GDP) on account of lower spending. “The anticipated miss in the capex target is expected to offset any shortfall on account of disinvestment and taxes, as well as the impact of the recent supplementary demand for grants. Accordingly, ICRA expects the fiscal deficit to mildly trail the FY2025 RBE of ₹16.1 lakh crore or 4.9 per cent of GDP,” Nayar said.