Mumbai: Up to 23 states are expected to miss budgeted capital expenditure by around Rs 1 lakh crore this financial year, according to a report. In the first three quarters, state capital spending grew only 11.6%, 30% below budgeted targets. This is despite an improvement in the overall position of the income account of the 23 states for which data is available, according to an analysis by Aditi Nayar, chief economist and head of research at Icra Ratings.

According to the agency, the combined capital expenditure and net lending of these 23 states stood at Rs 3.2 lakh crore in December 2022, which is only 46% of their FY23 budget estimates.

Therefore, a substantial amount of Rs 3.8 lakh crore of additional expenditure is required in the fourth quarter to meet their budgeted investments of Rs 7 lakh crore. This means that these states will have to spend 51% more than in Q4FY22.

More than 60% of the Rs 3.8 lakh crore gap is due to lagging states such as Uttar Pradesh, Maharashtra, Telangana, Andhra Pradesh, Madhya Pradesh, West Bengal and Pakistan. Rajasthan, according to the report.
Additionally, market borrowing in FY23 from January to February was below guidance. Additionally, utilization under the Centre’s Rs 76,000 crore interest-free investment loan scheme for FY23 was below 60% through January.

Despite an expected recovery in the March quarter, the agency estimated that the actual capital expenditure of these states in FY23 will be below budgeted levels by Rs 0.7-1 lakh crore on a combined. As a result, the budget deficit of these states is expected to follow the budget estimate of Rs 1-1.2 lakh crore in FY23, he added.