The Governor of the Reserve Bank of India recently noted that India’s economic growth was moderately impacted in the April-June quarter due to lower government spending amid national elections.

Data showed that 11 out of the 15 ministries clocked lower expenditure as a percentage of their total budgets in FY25 (April to August) compared to the same period last fiscal. But expenses appear to be picking up after the elections.

businessline’s analysis of ministry-wise expenditure from April to August 2024 shows that 8 out of the top 15 Central government ministries have accelerated spending in the month of August with expenditure in that month comprising over 20 per cent of the total expenditure in the five months. The total expenditure of Ministries including Chemicals and Fertilisers, Finance, Education and Rural Development in the month of August alone equals 29 per cent, 26 per cent, 27 per cent, and 25 per cent respectively of their total spends in the five-month period of FY25.

Harshal Patel, Research Associate, Emkay Global Financial Services, said that with the elections and Union Budget now out of the way, government spending has picked up. “Market borrowings by States is also likely to be higher for the rest of the year, as pent-up spending occurs, with States that have budgeted large populist schemes also likely to tap the market heavily,” he added.

Overall, Central government capex during April to August 2024 stood at ₹3 lakh crore compared to ₹3.7 lakh crore in the corresponding five months in FY24. 40 per cent of the capex this fiscal came in July and August. Revenue expenditure has been at the same level as last fiscal. Similarly, 42 per cent of the Centre’s revenue expenditure during April to August came in August alone.

State spending

Similarly, in case of the large States, Maharashtra, Karnataka and Uttar Pradesh have accelerated capital expenditure in July and August after a dull Q1. Out of ₹29,512 crore of capex by UP during April to August 2024, 70 per cent (₹20,791 crore) was spent in July and August. This metric stood at 65 per cent for Maharashtra and 55 per cent for Karnataka.

“The general elections are a major reason for the overall spending levels (as a per cent of Budget Estimates) being lower than last year’s levels for various Central ministries and States. However, expenditure by both States and Centre have picked up from July and the deficit would get corrected in the ensuing months,” said Paras Jasrai, Senior Economic Analyst, India Ratings & Research. The shortfall in spending by roads, transport, and other infrastructure-related ministries during April-June period was hampered by the swift progress of monsoon in the country, he added.

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