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Major states like Uttar Pradesh and Maharashtra have significantly failed in their ambitious capital spending plans for 2022-2023, while only six states have managed to come close to their investment targets, according to a Bank report of Baroda based on data from 25 states.
While the Center met its infrastructure spending targets last year, in line with its stated commitment to revive the economy until private investment rebounds, state performance has been patchy and disappointing, notes the report.
The 25 state governments for which data is available have now managed to spend only 76.2% or ₹5.71 lakh crore against their projected capex of ₹7.49 lakh crore for 2022-23.
“The two largest states by planned capex, UP and Maharashtra, spent ₹2.19 lakh crore, or 29.2% of the total capex of these 25 states. Their combined achievement was only 70%, which lowered the average of the entire sample,” the Bank’s economic research team pointed out.
The worst performance was recorded in Andhra Pradesh, which reached only 23% of its investment target, followed by Tripura, Nagaland and Haryana which reached less than 50%.
Only four states – Karnataka, Sikkim, Arunachal Pradesh and Bihar – met or exceeded the targets, while Jharkhand and Madhya Pradesh came very close to over 98% of the target. Eleven states had crossed the 80% threshold, including Tamil Nadu (89.9%) and Gujarat (89.5%).
“The phenomenon of underperformance is not really new since the rate was around 72% in 2019-20, while it had improved to 95% in 2021-22. States certainly need to improve their track record here in order to move the investment cycle forward, as the private sector will take some time to come in broadly,” the report concludes.