Govt Capex Down In April-Aug; FY25 Targets Likely To Be Missed
The central government's capex and 22 states’ capital outlay and net loans down by 19.5 per cent YoY and 4.3 per cent from April to August FY2025, respectively
Rating agency Icra in a report has said that the central government capital expenditure (capex) declined in April to August FY2025 and FY2025 targets are likely to be missed. The capex (Rs 3.0 trillion; YoY: -19.5 per cent) trailed the year-ago levels significantly during April-August FY2025.
Consequently, to meet the FY2025 BE (Rs 11.1 trillion), the government needs to incur capex amounting to Rs 8.1 trillion during September to March FY2025, implying a growth of 41 per cent relative to the corresponding period of FY2024 (Rs 5.7 trillion), which appears quite challenging.
With an average run rate of Rs 1.2 trillion per month during September-March FY2025 (vs. Rs 0.8 trillion/month in September to March FY2024), Icra expects the FY2025 capex target to be missed by at least Rs. 0.5 trillion.
Additionally, with the capital outlay and net lending of 22 states (Rs 1.7 trillion; -4.3 per cent) remaining tepid during April to August FY2025, owing to the general elections and heavy rainfall in some states and a lull expected for a few weeks in Q3 FY2025 in the election-bound states of Haryana and Maharashtra, Icra expects the capital spending by the states to undershoot the capex target set for FY2025.
The report also added that central sector infrastructure completions eased in H1 FY2025 and may improve in H2 amid a sizeable pipeline. The cost of commissioning of such projects moderated to Rs. 0.9 trillion in H1 FY2025 from Rs. 1.4 trillion in H1 FY2024, even as several projects completed rose slightly to 156 from 154, respectively.
Based on this and the anticipated completion schedule available for H2 FY2025, a massive Rs. 10.6 trillion worth of projects are intended for commissioning in FY2025. This appears quite ambitious, given the subdued pace seen in H1, and past year trends (actual turnout=35 per cent of the actual target).
"Nevertheless, the execution of infra projects typically picks up momentum post monsoons, and hence, would remain a key monitorable, going forward," Icra added.
