Before the elections of next year, the government has decided to anticipate the Capital expenditure and carry out 80% of the proposed Capex by the end of December. Although several ministries have started moving and used 45-46% of their allocations, there are others which are currently lingering and have to catch the pace. Ordinarily the Finance Ministries want the other ministries to spend two third of the allocated fund by the end of December and use the rest during the period of January- March. The ministries which are lagging often see a decline in the budget while the better performing ministries are given more funds when the finance minister presents the revised estimates for the whole year.
As per the data available with the Finance Ministry, in the period of June-April this year the Centre’s Capital Expenditure has raised 55% to Rs 2.7 lakh crore ,with more than 27% of the Budget already been acquired for this purpose. Central Public Sector undertakings are seen lagging behind,having used up around one tenth of the Internal and Extra Budgetary Resources, even with an enduring 25% rise in spending within the first quarter of the financial year.
A higher spending by the government and the Public Sector Undertakings is regarded vital to ensure that the growth momentum because the rise in interest rates and weak demand in export market has hindered the private sector in creating new capacities or expanding the enduring plants.
Pre financing the Capital Expenditure will also assist the government to accomplish many of its projects within the election period. Therefore, at the time of Election, the government can showcase these projects as their achievement which would work as a tool to gain the public’s attention towards the centre and its activities for the development of the nation.
