With the private sector yet to accept the baton for carrying out capital expenditure, the burden of spending on capital investment to spur growth rests with the Centre and state governments. While the Centre and some states have done well, a few of the larger states have dragged their feet on capex spend in this fiscal year.

A businessline analysis of data from the Comptroller and Auditor-General shows that some of the larger states such as Maharashtra, Karnataka and Gujarat have spent less than half the money they budgeted for capex in 2023-24. We have considered the latest available data for this analysis.

While Maharashtra has spent 37.49 per cent of its budgeted capex until January 2024, Karnataka has spent 41 per cent. Gujarat spent 46.4 per cent of its capex budget until December 2023. With these larger states accounting for a large chunk of the country’s capex, their lacklustre performance does not bode well for growth. The worst among the lot is Punjab, which spent just ₹3,393.05 crore on capex, or 32.77 per cent of the budget estimate.

However, this is not something new. PRS Legislative Research’s ‘State of State Finances 2023-24’ report notes that “States on average underspent their (capex) budget by 10 per cent between 2015-16 and 2021-22,” adding, “One of the reasons for such under-spending could be raising less than the budgeted revenue.” It also notes that states under-spend on capex to compensate for lower revenue receipts.

Moreover, with the Lok Sabha elections drawing near, the need to spend on welfare measures to woo the electorate would also have increased revenue expenditure. The need to rein in the fiscal deficit could have led to a reduction in capex spending.

On the other hand, the states that have done well are Telangana, Madhya Pradesh, Haryana, Kerala and Bihar, having spent more than 70 per cent of the budget. Telangana stood out, having spent 90 per cent of its FY24 budget.

Brighter than last year

Data shows that most states spent more in the first nine months of FY24, compared to the same period in FY23. The only exceptions here are Punjab and Karnataka, which spent less in FY24.

The two Telugu-speaking states spent more than double their FY23 expenditure in FY24. While Andhra Pradesh spent ₹7,367.1 crore in FY23, it rose to ₹20,941.56 crore in FY24. Telangana saw a 151 per cent increase, where expenses increased from ₹13,524.45 crore in FY23 to ₹33,991.72 crore in FY24.