The government may not be able to meet its ambitious capital expenditure (capex) target of Rs 11.1 lakh crore for the financial year 2024-25 (FY25), with current spending trends showing a significant slowdown. Data from the Controller General of Accounts (CGA) reveals that capex in the April-November period contracted by 12.3 per cent year-on-year (Y-o-Y), with only 46.2 per cent of the Budget Estimates utilised compared to 58.5 per cent during the same period last year.
To meet the FY25 capex target, the Centre would need to expand its spending by 65 per cent Y-o-Y in the December-March period or sustain a monthly expenditure rate of Rs 1.5 lakh crore.
The fiscal position
The fiscal deficit stood at Rs 8.5 lakh crore, or 52.5 per cent of the full-year target, for April-November FY25, a decline of 6.6 per cent from the Rs 9.1 lakh crore recorded in the same period last fiscal. While gross tax collections rose by 10 per cent Y-o-Y in November 2024, net tax revenues saw marginal growth of just 0.5 per cent.
Income tax collections increased by 24 per cent Y-o-Y, but corporate tax collections fell by 1 per cent. The government has achieved 56 per cent of its net tax revenue target so far, lower than the 62 per cent reached in the same period last year.
Revenue expenditure grew by just 1 per cent Y-o-Y in November, with cumulative spending reaching 60 per cent of the Budget Estimate, marginally above the 59 per cent recorded in the year-ago period.
The government’s capex shortfall, combined with slower revenue expenditure growth and a subdued disinvestment pipeline, is likely to put pressure on achieving fiscal consolidation goals. Despite robust income tax collections, weaker corporate tax inflows and slower capex momentum could result in missed targets for FY25.
