The government is optimistic of meeting capital expenditure (capex) target of ₹11.11 lakh crore during the current fiscal, a senior Finance Ministry official said on Monday. It was also indicated that if required, curbs under cash management guidelines might be relaxed in January-March quarter .

“I would not like to believe that there will be expenditure shortfall,” the official said. Further, he explained that capex has two components — Centre’s and States’. Now the effort would be to converge these to ensure meeting the target. He also reminded that appropriation act was assented only on August 14, which authorises payment and appropriation of certain sums from and out of the Consolidated Fund of India for the services of the financial year 2024-25.

The official also highlighted that there has been no restriction on expenditure as part of cash management guidelines and Ministries have been encouraged to spend more and more. Per the spending guidelines, ministries and departments are permitted to spend up to 25 per cent of Budget Estimates in each of the first three quarters. For the fourth quarter, the cap is 33 per cent. These limits are keeping in mind the cash-flow and even spreading of expenditure in 12 months.

The official indicated that relaxation in expenditure norms might continue in January-March quarter, too. This is criticalas against the target of ₹11.11 lakh crore for the full fiscal, actual capex has been less than ₹5 lakh crore during April-September period . It is around 15 per cent lower than corresponding period of last fiscal. It is said that Model Code of Conduct for General Election affected the expenditure in April-June quarter. Though, it expanded sharply in July the momentum didn’t sustain in the subsequent two months.

According to Aditi Nayar, Chief Economist of ICRA, to meet the budget target, Centre needs to incur a capex of ₹1.16 lakh crore every month during October-March period. This needs a growth of 52 per cent during second half compared to the same period of FY24.

No cut in borrowing

Meanwhile, the official said borrowing for the current fiscal is unlikely to be curtailed. The government announced borrowing of ₹14.01 lakh crore, of which ₹7.4 lakh crore was borrowed during April-September and the remaining has been planned during the ongoing half. “Now in order to smoothen the fiscal management and anticipating the enhancement of gross borrowing next fiscal on account of redemptions of Covid borrowing, we have already completed buyback worth ₹80,000 crore and switch auction (replacing shorter-term bonds with longer-term bonds to smooth out its liability profile) of ₹1.35 lakh crore against BE of ₹1.5 lakh crore,” he said.

Due to pandemic, the government had to borrow additional of over ₹3 lakh crore during FY21, of which ₹64,000 crore worth of bond maturing next fiscal.

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