New Delhi ,oct 1
The central government will have to increase the speed of spending capital expenditure by 41 per cent in the remaining months of this fiscal year to meet the capital expenditure growth targets.Experts noted that in the first five months of this fiscal (April-August), there was a contraction of 19.5 per cent in government capital expenditure.DK Srivastava, Chief Policy Advisor at EY India, commented on the CGA data released on Monday, that “With an annual target of capital expenditure growth of 17.1 per cent in 2024-25 over last year’s CGA actuals, the growth required for the remaining months to meet the budgeted target is 41.0 per cent”.He also added that India’s growth will be driven by domestic demand which in turn is dependent on government infrastructure push in recent years. All efforts should be made to check any slow down of this important growth engine.”To ensure the Indian economy continues its impressive track record of maintaining an annual growth rate of 7 per cent or more–a feat achieved over the past three years since 2021-22–the Government of India needs to proactively accelerate its capital expenditures” added Srivastava. The Reserve Bank of India on Monday released fiscal data for April-June 2024-25, revealing key trends in the country’s economic performance.The data showed that India’s Current Account Deficit (CAD) widened to USD 9.7 billion, or 1.1 per cent of GDP, in the first quarter of FY25, up from USD 8.9 billion (1.0 per cent of GDP) in Q1 2023-24, and compared to a surplus of USD 4.6 billion (0.5 per cent of GDP) in Q4 2023-24.This widening of the CAD on a year-on-year basis was largely due to the widening merchandise trade deficit, which rose to USD 65.1 billion in Q1 2024-25 from USD 56.7 billion in Q1 2023-24.Manoranjan Sharma, Chief Economist at Infomerics Ratings, commented on the data, noting that India’s fiscal deficit for April to August 2024 stood at Rs. 4.35 lakh crore. This deficit accounted for only 27 per cent of the budgetary estimates and marked an improvement from the previous year’s 36 per cent during the same period. Sharma emphasized that this data is significant in light of the government’s goal of gradually narrowing the fiscal deficit to 4.9 per cent of GDP in FY25, down from 5.6 per cent in FY24, and noted that the progress is on track. “In conformity with our expectations, India’s fiscal deficit for April to August 2024 came in at Rs. 4.35 lakh crore rupees. This deficit constituted 27 per cent of the Budgetary estimates and marked a welcome reduction from the previous year’s 36 per cent. Total receipt was Rs. 12.17 lakh crore rupees; overall expenditure was Rs. 16.52 lakh crore rupees. They were 38 per cent and 34.3 per cent, respectively of FY 25 target.”
