A Treasury Department report shows states are spending more money on capital spending. This is suitable for Capital mobilization center for the fiscal year 2023-24 more than 37 percent.
Report, prepared by Department of Economics (DEA) of the Treasury Department, highlighting that the 24 major states, which have presented their Budgets since March 23, have announced a cumulative 17.7% increase in capital expenditures in fiscal year 24. compared with the previous year’s Budget estimate.
“Countries have also announced various measures to facilitate capital formation and support infrastructure growth. These include Gujarat’s announcement on developing a road network to connect with border areas, Mizoram’s Socio-Economic Development program to provide capital to families to support economic activities. ongoing or starting new business ventures, Odisha’s Mukhyamantri Janajati Jeebika Mission to mitigate critical infrastructural needs related to livelihood promotion and support tribal livelihood promotion, among others,” it said.
Real capital expenditure growth of the State
|Uttar Pradesh||(-) 29.1||59.2||19.6|
|West Bengal||(-) 32.9||47.5||25.7|
Before, when presenting Union Budget for February 1Finance Minister Nirmala Sitharaman has said that investments in infrastructure and productive capacity have a large exponential impact on growth and employment. . Accordingly, to promote an efficient investment cycle and job creation, the budget increased capital expenditure by 37.4% in the Budget Estimates for the fiscal year 2023-24 to 10 trillion yen from 7.28 trillion yen in the revised Estimates for the fiscal year 2022-2023.
The Fiscal Policy Statements, as part of the Union Budget, emphasize that investment nearly triple capital expenditure in 2020. Critical Infrastructure and Strategy Ministries such as Road Transport and Highways, Railways, Defence, etc. will take the lead in driving capital spending in 2024.
In the Union Budget, to strengthen the hands of the States, the plan to provide financial support to the States for capital expenditure introduced in fiscal year 2022-23 has been extended for fiscal year 2023. -24, with an enhanced payout of 1.30 lakh crore. This represents a 30% increase over the BE 2022-23 allocation and represents almost 0.4% of GDP for fiscal year 2023-24.
Also read: Investment Goals 2023: Who gets and who doesn’t?
Increase the revenue
Meanwhile, the report prepared by the DEA notes that increased spending on Capex by countries is backed by strong revenue generation. States saw strong revenue growth in fiscal year 2023, with Total Revenue posting 14.1 percent growth between April and February 2023, thanks to the strong growth in tax and non-tax revenues. Actual revenue in the same period reached 80.1% of the estimate. In addition to strong economic activity, revenue collection in the States has been enhanced by various measures taken in this direction by the State Government.
These include Assam’s liquidation plan to pay off debts, Haryana’s one-time plan to pay old VAT charges, Assam and Kerala’s Green tax, and Uttar Pradesh’s new alcohol policy with increased fees . Some states like Tamil Nadu, Andhra Pradesh, Telangana, Karnataka, Madhya Pradesh, Haryana, Kerala, Assam and UT of Puducherry have considered amending their electricity tariff for fiscal year 23. States like Tamil Nadu, Telangana and Kerala has revised property tax to support their revenue
Increased focus on capital investment coupled with strong revenue generation has improved the State Budget metrics. The total state fiscal deficit as a percentage of budget estimates for April-February 2023 was 51%, slightly higher than the previous year level but lower than in previous years. pandemic occurred.