Key States’ capex falls short of projection

New Delhi: The capex of key State governments is projected to rise by 13 per cent in the current fiscal (FY25) to Rs6.5 lakh crore, according to a report on Wednesday. However, compared to the FY25 budget estimate (BE) of Rs7.2 lakh crore, the latest projection falls short following a dull start to the capex in the initial months of this fiscal as well as the anticipated undershooting in States’ revenues, according to credit agency ICRA. The agency has projected the combined capital spending of 13 major State governments to expand by 13 per cent. According to Aditi Nayar, chief economist at ICRA, with a 13.5 per cent contraction in capital spending during the first four months of FY25 and heavy rainfall in some of the states in Q2, capex by the States appears set for a back-ended surge in the second half of this fiscal. “We forecast a double-digit 12.6 per cent expansion in the combined capex of sample States in FY2025; nevertheless, this will be lower than the actual 19.6 per cent increase seen in FY24 provisional actuals (PA),” she mentioned.