India aims to achieve 60% of capex target by Sep 22 to keep inflation at bay

  • The finance ministry has asked key infrastructure ministries and departments to speed up projects, setting a target of achieving at least 60% of the FY23 capital expenditure budget target, or INR4.45tr out of the budgeted INR7tr, by the end of Sep 22.
  • North Block wants to push capital expenditure to support the economy buffeted by high inflation, geopolitical risk and monetary tightening. A government official added that infrastructure projects will be closely monitored to prevent any delays.
  • Ministries and departments have been asked to provide detailed monthly plans and progress reports, giving specific reasons for delays in project implementation, said another official.
  • The department of expenditure will also closely monitor projects to ensure there is no wasteful spending as targets are pushed, the official said.
  • “In every quarter, there will be a review meeting where it will be discussed and solved at its earliest,” the official said.
  • The move seeks to address concerns that the capital budget may be slashed to provide for additional food and fertiliser subsidies as well as relief measures by the Centre to calm inflation, including duty cuts on petrol, diesel and edible oils besides key industrial inputs. The duty cuts add up to a revenue cost of INR1.5tr.
  • Officials have maintained that even if the government is required to cut spending, it would rather cut revenue expenditure.
  • In Apr 22, the cumulative capital spending of all departments and ministries was INR789.3bn, 67.5% higher y/y. The highways and railways account for about INR585bn of the total sum.
  • The Ministry of Road Transport and Highways (MoRTH) spent INR403.2bn in Apr 22, compared to the budgeted sum of INR1.18tr

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