India’s top 18 states are expected to record a growth in capital outlay by 18-20 per cent on-year this fiscal, following ~14 per cent growth in fiscal 2023, said an analysis report by CRISIL Ratings. These states account for ~90 per cent of the aggregate gross state domestic product of all states.
According to the report, the increase in spending will be driven by healthy goods and services tax (GST) collection, stable and upfront devolution from the central government (share in central taxes, or SICT), and allocation of Rs 1.3 lakh crore (Rs 1 lakh crore budgeted last fiscal) in the form of interest-free loans to all the states for capital expenditure (capex).
“This fiscal, states have budgeted a strong ~43 per cent increase in their capital outlays from fiscal 2023 levels. If actual spending continues at past averages of 82-85 per cent of the budgeted outlay, it would translate to 18-20 per cent growth this fiscal. Here, we expect elections in some states, funding support from the Centre in the form of advance payment of SICT, and strong GST collection to provide the impetus. For the record, capital outlays already rose ~52 per cent on-year in the first six months of this fiscal. But a moderation in pace is likely in the second half as the outlay is more evenly distributed this year,” said Anuj Sethi, Senior Director, CRISIL Ratings.
Read more at: FINANCIAL EXPRESS
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