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.

Budget 2016: Enhanced capital spending likely

The coming Union Budget 2016-17 will likely come good on Finance Minister Arun Jaitley’s promise to continue the government’s public spending push, with capital expenditure (capex) for the next year expected to come close to Rs 3 lakh crore for the first time.

At a time when private sector balance sheets are stretched and banks burdened with non-performing assets, Jaitley had stated the Centre’s commitment to boost spending in infrastructure as an impetus for growth. For 2015-16, the finance minister had budgeted Rs 2.41 lakh crore in total capex (including loan disbursements), about Rs 49,053 crore, or 25.5 per cent, higher than the 2014-15 revised estimates of about Rs 1.92 lakh crore.

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Next year too, a similar push is expected as the India Budget 2016-17 budgeted capex could be around 20-25 per cent higher than this year. Compared to the budgeted figures available, that comes to around Rs 2.90-3.02 lakh crore.

Budget 2016: Enhanced capital spending in offing

Upcoming Union Budget 2016-17 will likely come good on Finance Minister Arun Jaitley's promise to continue the central government's public spending push, with capital expenditure for the next year expected to come close to Rs 3 lakh crore for the first time ever.

At a time when private sector balance sheets are stretched and banks burdened with non-performing assets, Jaitley had stated the centre's commitment to boost public spending in infrastructure as an impetus for growth. For 2015-16, the Finance Minister had budgeted Rs 2.41 lakh crore in total capital expenditure (including loan disbursements), about Rs 49,053 crore or 25.5% higher than the 2014-15 revised estimates of about Rs 1.92 lakh crore.

Next year too, a similar push is expected as the India Budget 2016-17 budgeted capital expenditure could be around 20-25% higher than this year, Business Standard has learnt. Compared to the budgeted figures available, that comes to around 2.90-3.02 lakh crore.