Budget 2016: Capital Spending By States Could Slow In FY16

Growth in capital spending by states might slow in 2015-16 as compared to 2014-15, according to a study by ICRA of nine state Budget News.

For 2015-16, capital spending was budgeted to grow at a slower 15 per cent as compared to roughly 26 per cent in 2014-15 (revised estimates). Given the large variance between revised estimates and audited state accounts, the gap might be lower.

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The fiscal space for boosting capital spending in India Budget News 2016-17 at the state level might be further constrained in the coming year because of two reasons: The expected pay revisions of state employees in line with the Seventh Pay Commission's award and states taking over the accumulated debt of power distribution companies (discoms) under the central government's UDAY scheme, which would lower the funds available for capital expenditure.