Many states to miss capex targets this fiscal: ICRA

As many as 23 states are set to miss the budgeted capital spending by around Rs 1 lakh crore this fiscal, according to a report.

In the first three quarters, the states' capex grew just 11.6 per cent, which is trailing by 30 per cent of the budgeted targets. This is despite an improvement in overall revenue account position of the 23 states whose data is available, according to an analysis by Aditi Nayar, the chief economist and head of research at Icra Ratings.

According to the agency, these 23 states' combined capital outlay and net lending stood at Rs 3.2 lakh crore as of December 2022, which is only 46 per cent of their FY23 budget estimates.

Consequently, a substantial Rs 3.8 lakh crore of additional spending is required in Q4 to meet their budgeted capex of Rs 7 lakh crore. This means that these states will have to spend 51 per cent more than the Q4FY22.

More than 60 per cent of the gap of Rs 3.8 lakh crore is on account of laggard states such as Uttar Pradesh, Maharashtra, Telangana, Andhra Pradesh, Madhya Pradesh, West Bengal and Rajasthan, the report said.

Moreover, market borrowing during January-February FY23 has been lower than indicated. Additionally, utilisation under the Centre's Rs 76,000 crore interest-free capex loan scheme for FY23 has been less than 60 per cent till January.

Notwithstanding an anticipated back-ended pick-up in the March quarter, the agency has estimated that actual capex of these states in FY23 will undershoot the budgeted levels by Rs 0.7-1 lakh crore on a combined basis. As a result, the fiscal deficit of these states are projected to trail the budget estimate by Rs 1-1.2 lakh crore in FY23, it added.