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Given the fact that states now flood control, education and At the individual level, some interest free loans to support sectors such as irrigation and for taking the state forward.
have a higher capex spend, IN FY24, UTTAR transport, among others. This states are even exceeding the GOING FORWARD, THE the states, an increase from rural roads. Urban transport The Centre could consider
their role has acquired PRADESH, is followed by Gujarat which budget estimates when it ALLOCATION UNDER Rs. 1.3 lakh crore announced is another area where States handholding such states or
MAHARASHTRA WERE
greater significance in building THE TOP CAPEX notched up 58.1 per cent comes to actual spending on 50-YEAR INTEREST in the interim budget. should be persuaded to spend providing incentives so that
the economic momentum and SPENDERS IN growth which could be capex. For example, Telangana FREE LOAN SCHEME Provisions can be made so more. Priority should be for the laggard states also join
enhancing the productive ABSOLUTE TERMS attributed to higher allocation has surpassed budget SHOULD BE ENHANCED that projects with higher ensuring effective fund the national mainstream when
capacity of the economy. towards urban development, estimates by a huge margin BY 25-30 PER CENT multiplier and efficiency gains utilization and timely it comes to capital spending.
irrigation, and transport, with actual spending rising to are prioritized, and viable completion of projects.
What comes as a surprise is among others. 118 per cent of budget projects are identified and To conclude, it is important
BIHAR WITNESSED that capex by Uttar Pradesh estimates in 2023-24. Similarly, In view of the pivotal role actioned. A major concern is to that the thrust on capex
THE HIGHEST (UP) has crossed Rs 1 lakh It is also heartening to note in Bihar and Madhya Pradesh, played by states in address the challenge continues at the state level so
GROWTH IN CAPEX crore in 2023-24, which is the that most states are showing too, actual expenditure infrastructure development, Apart from fulfilling whereby some states do not that its multiplier effects
SPENDING IN THE highest among states. It shows significant momentum while exceeds 100 per cent of the Union Budget 2024-25 state-specific requirements, have the capacity to become visible in terms of
LAST FIVE YEARS a growth of around 17 per investing in asset creation Budget estimates during the has announced provision of States may also be undertake capital expenditure asset creation, raising
cent over the previous year. through capital spending. This year. Both Bihar and Madhya Rs 1.5 lakh crore for 50-term encouraged to invest more in to the extent that is required productivity and jobs.
The state invested Rs 0.93 is borne out from data that Pradesh have been fully
An analysis of individual states lakh crore in 2022-23. UP was shows that all states taken utilizing the amounts
springs a few surprises. For followed by Maharashtra with together have spent more proposed in their budgets on
example, the cumulative a capex spend of Rs 0.71 lakh than 80 per cent of the capex over the last two years.
growth of capital expenditure crore, up 17.7 per cent year budgeted amount on capex. However, actual spending on
in Bihar over the last five on year compared with Rs capex in the states such as
years, at 30 per cent between 0.61 lakh crore in 2022-23. Punjab and Chhattisgarh have
2019-20 and 2023-24, is the ACTUAL CAPEX been trailing the budget
highest among states. No In terms of growth, however, SPENDING OF estimates in 2023-24. In fact,
TELANGANA, BIHAR
doubt, this has come over a Telangana, at 148.7 per cent in AND MADHYA Punjab has been ineligible for
low base of 2019-20, but a 2023-24 has done remarkably PRADESH HAS interest free loan as the state
sequential rise in capex over well and topped the charts on EXCEEDED THE has not met specific
the last five years shows that capex spending. Sectors which BUDGET ESTIMATES conditions specified under
Bihar has invested significantly have shown major increases IN 2023-24 the scheme.
in asset creation. This is in capex include irrigation and
followed by Telangana (26 per
cent), Gujarat (21 per cent)
and Odisha (21 per cent).
Haryana is the only state to Actual Capex Spending by the States
have recorded a drop in 1.20 (Rs lakh crore)
capex (-2 per cent) between 1.09
2019-20 and 2023-24. 1.00

The latest available data 0.80 0.72
shows that the cumulative 0.60 0.57
capex spend of 17 states rose 0.60 0.52
to Rs 6.54 lakh crore in 0.44 0.44 0.40 0.35
2023-24 from Rs 5.28 lakh 0.40 0.28 0.26
crore in the previous year. 0.20 0.21 0.16 0.15 0.13 0.11
And out of a total of 17 0.05
states, 8 states namely 0.00
Gujarat, Karnataka, Madhya
Pradesh, Maharashtra, Odisha, Maharashtra Gujarat Karnataka Telangana Odisha Tamil Nadu Bihar West Bengal Rajasthan Jharkhand Chhattisgarh Haryana Kerala Uttarakhand Punjab
Uttar Pradesh, Telangana and Uttar Pradesh Madhya Pradesh
Tamil Nadu accounted for
almost 75 per cent of the FY23 FY24
total capital spend. Hence
there is some concentration Source: CAG
in terms of capex among
states.

24 ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY 25
QUARTERLY JOURNAL OF ECONOMICS
QUARTERLY JOURNAL OF ECONOMICS
AUGUST 2024 AUGUST 2024