Public capex turns the corner; Central spending seen jumping 12% over pre-pandemic level: Report

Public capex cycle has improved and indicate a strong recovery to pre pandemic levels with both centre and state capital expenditure nearly crossing FY20 levels, growing faster than the GDP growth rate, as per report.

Central capex has already recovered and state capex too to reach pre-pandemic levels if budgetary targets are met. Overall trend indicated that pandemic has not caused a major loss in the government capex in terms of trend as per the report.

As per the Crisil report, central capex grew 31% over the last fiscal and if the trend continues must grow 19% on a YoY basis in the second half of this fiscal to meet the 12% pre-pandemic level target. And for the states they must meet 80-85% of the target to breach those levels. It is worth noting that state capex is typically 1.4 times higher than the central capex and plays a major role in infrastructure building.

Central fiscal deficit has widened to 9.4% of GDP in fiscal 2021 from 4.6% in fiscal 2020 due to pandemic related spending and decline in revenue and despite that central capex has shown huge improvement this fiscal.

Central capex for the period April-October accounted for Rs 2.5 lakh crore (US$ 33.32 billion), higher by 28% on a YoY basis and represented 46% of the budgeted spend for full fiscal year. With sector wise data indicating higher capex during the first half of fiscal 2020 and 2021 on road transport and highways, railways, housing, telecommunication, and healthcare.

State has spent 29% of their target and 80% of the capex spend came from 16 states -- Andhra, Bihar, Chhattisgarh, Gujarat, Haryana, Jharkhand, Karnataka, Kerala, MP, Maharashtra, Odisha, Punjab, Rajasthan, Tamil Nadu, Telangana, and UP. Generally, state try to spend towards capex by the end of the year.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.