Capital Outlay Of Top 18 States To Grow 7-9% This Fiscal: Crisil Ratings

The total capital outlay of India's top 18 states is projected to grow by 7-9 per cent year-on-year to Rs 7.2 lakh crore in the financial year 2024-25, building on a high base from the previous year, according to Crisil Ratings. In 2023-24, this outlay increased by 27 per cent, reaching Rs 6.7 lakh crore.

The rating agency stated that key segments driving this growth include transport, water supply, and sanitation (including housing and urban development), while irrigation is expected to see modest growth. These 18 states represent nearly 94 per cent of the overall capital outlays of state governments in India. Their capital outlay as a percentage of gross state domestic product (GSDP) is projected at 2.4 per cent, consistent with last year's level of 2023-24, but higher than the 2.0-2.3 per cent range observed between fiscals 2018 and 2023.

Crisil Ratings anticipates that these states will have the fiscal space required to support these capital outlays, backed by higher Goods and Services Tax (GST) collections, states' shares in central taxes, and interest-free loans for capital expenditure (capex) from Delhi.

Anuj Sethi, Senior Director, Crisil Ratings, said, “We expect a 7-9 per cent growth in capital outlay, translating to states achieving approximately 90 per cent of the budgeted target this fiscal. Although similar to last fiscal, this will be higher than the 82-84 per cent levels achieved between fiscals 2018 and 2023.”

The Centre has raised the allocation for interest-free capex loans to all states to Rs 1.5 lakh crore this fiscal year, up from Rs 1.3 lakh crore last year. Last year, 80 per cent of the allocated funds were transferred to state governments, and the rating agency expects a similar proportion this fiscal year. (ANI)