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* Based on actual data of 22 states/ Union Territories (UTs) that accounted for 96-97% of all states, aggregate capex (capital spending less loans & advances (L&As)) of all states increased 28% YoY in FY22, following two consecutive contractions. The estimated aggregate capex of INR5.3t in FY22 was only 84% of the revised estimates (REs). States’ aggregate capex, thus, stood at 2.3% of GDP in FY22, the highest in three years but slightly lower than the pre-Covid period (FY17-FY19).

* Based on unaudited provisional data available up to Feb’23 for 21 states/UTs, our estimates suggest that the states’ aggregate capex stood at INR6t (or 2.2% of GDP), up 12.3% YoY in FY23. If so, states’ aggregate capex was only 83% of REs last year, similar to the achievement witnessed in the past several years.

* Data for individual states showed that only three states – GJ, HP and KA – met (or exceeded) their BEs for the year. At the same time, as many as six states – AP, JK, HR, TS, WB and RJ – achieved less than 70% of their BEs.

* Accordingly, the aggregate capex of the public sector (including the Union government, Central Public Sector Enterprises [CPSEs] and state governments) rose 14% YoY in FY22 and another 9.6% YoY in FY23. More importantly, the public sector capex stood at 5.7% of GDP in FY23, down from 6.0% of GDP in FY22 – the lowest in eight years.

* An analysis of 2023-24 budgets of 22 states/UTs confirms that the aggregate capex is budgeted at INR8.7t in FY24, up 21.1% YoY over FY23RE and 46.5% higher than FY23P. Adding it up with the targets of the Union government and CPSEs (excluding FCI), the public sector capex is budgeted to grow 30.6% YoY (over FY23P) to a 14-year high of 6.7% of GDP. ? Historical data suggested that the states’ actual capex has averaged only ~80% of BEs and the public sector’s aggregate capex has averaged ~90% of BEs. Thus, it suggests that public sector’ aggregate capex could grow be 6.1% of GDP in FY24E (up ~18% YoY), higher than FY23 but same as in the previous years.

State government’s aggregate capex grew 28% YoY in FY22…: All major states and UTs have presented their 2023-24 Budgets over the past two months. Based on actual data of 22 states/UTs# (accounting for 96-97% of all states), aggregate capex of all states increased 28% YoY in FY22, following two consecutive contractions (Exhibit 1). States’ aggregate capex, thus, was 2.3% of GDP in FY22, the highest in three years but slightly lower than the pre-Covid period (Exhibit 2)

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