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Amid FY23 Union Budget's focus on investments, leading domestic credit rating agency Crisil has said that the capital expenditure is ‘not as high as it sounds’. However it was quick to add that considering that governments usually tend to cut capex during a crisis, the government has maintained its focus on growth-spurring initiatives amid the pandemic.

The research wing of the agency said, if one excludes the Rs 1 lakh crore of loans to states for capex included in the headline figure of Rs 7.50 lakh crore or 2.91 per cent, the actual spend in FY23, will go down to 2.58 per cent of GDP, which is barely at par with the revised estimate of FY22. It also pointed out that the overall number showing a rise has been 'offset' through a reduction in internal and extra budgetary resources (IEBR), which funds capex of central public sector enterprises (CPSEs). It said IEBR has been budgeted at 1.82 per cent of GDP for the next fiscal, much lower than the pre-pandemic average (fiscals 2018-20) of 3.33 per cent, attributing the same to poor capex execution by CPSEs lately. The overall central capex for FY22 which is the sum of effective budgetary capex and IEBR, would remain intact at 5.96 per cent of GDP for next fiscal, the same as pre-pandemic average between 2018-20.

Noting that the government has been able to fully spend its capex budget, the report said in the last two fiscal, a bulk of expenditure happened in the last quarter and made a plea for frontloading of the committed money to help the demand process. It said the mix of the capex budgeted for FY23 favours employment, noting the focus on roads and highways and railways sectors. However, it said the commitment to defence, another jobs-intensive area, has softened a bit.