Union Finance Minister Nirmala Sitharaman recently addressed the rising capital expenditure of the central government, emphasizing its growth even amid last year’s national elections. She confidently stated that there are no fiscal limitations hindering this progress, showcasing the government’s commitment to transparent fiscal management and economic prudence.

Increased Capital Expenditure in FY24 and FY25

Sitharaman highlighted that the revised estimate for the Centre’s capital expenditure in FY24 stands at ₹9.5 trillion, while the previous financial year ended with a robust ₹10.18 trillion. This marks a significant 7.3% increase, countering claims of budget cuts.

• Key figures:
  • FY24 Revised Estimate: ₹9.5 trillion
  • FY23 Actual Expenditure: ₹10.18 trillion
  • Increase: 7.3%

Response to Criticism

Her comments were a direct response to former Finance Minister P. Chidambaram, who pointed out a discrepancy in the budgeted estimate for capital expenditure in FY25, which was initially set at ₹11.11 trillion but later revised to ₹10.18 trillion. Sitharaman explained that such adjustments are typical in public finance and reflect evolving needs based on expenditure trends and implementation capacities.

Factors Influencing Capital Expenditure

Sitharaman elaborated on the various factors influencing capital expenditure, including:

• The model code of conduct during general elections
• Extreme weather conditions
• Lower spending by states and certain central agencies
• Delays in submission of utilization certificates by several states

These factors contributed to the need for revisions, which, according to her, do not imply fiscal constraints.

Special Assistance Scheme Insights

Discussing the Special Assistance to States for Capital Investment (SASCI), she noted that the budget estimate for FY25 was ₹1.50 trillion, revised down to ₹1.25 trillion as of February 1. However, actual releases exceeded these estimates, with ₹1,46,362 crore disbursed by March 26, further showcasing the government’s commitment to capital investments.

Looking Ahead

The government’s budget for the upcoming fiscal period, presented on February 1, proposed a capital expenditure of ₹11.21 trillion, along with an additional ₹1.5 trillion earmarked for states under the SASCI scheme for FY26. Sitharaman’s statements reflect a proactive approach to fiscal management, aiming to bolster economic growth amid external challenges.

In summary, the central government’s rising capital expenditure underscores its dedication to economic development and addresses concerns regarding fiscal constraints. As the landscape evolves, the government remains committed to navigating challenges with strategic planning and transparent financial practices.