By Nikunj Ohri
NEW DELHI- India is considering the relaxation of quarterly spending limits to ensure it does not fall short of its capital expenditure target for the financial year 2024/2025, according to a government source.
Federal government spending slowed during April-June due to the national elections, with total expenditure in six months through September at about 44 percent of the full-year target.
Analysts say the weaker spending is one of the reasons for a recent slowdown in India’s high frequency economic indicators.
India’s industrial output dropped for the first time in nearly two years in August but is expected to grow 2.5 percent in September, according to a Reuters poll.
“Capital expenditure will pick up in the coming months, and we will ensure as much as possible capex happens in January-March,” said the government source, who declined to be named as they are not authorized to speak to media.
The finance ministry did not immediately respond to a Reuters request for comment.
Capital expenditure, or spending on building physical infrastructure, was at 4.15 trillion rupees ($49.18 billion) during April-September, or 37 percent of the annual target, against 4.9 trillion rupees a year earlier.
The government targets capital expenditure at a record 11.11 trillion rupees in the fiscal year ending March 31.
The government is unlikely to alter its market borrowing for the fiscal year 2024/2025, as the plan was firmed up considering the higher redemption of loans availed during the COVID-19 pandemic, the source said.
This would also impact the gross borrowing in 2025/26, which may see a spike due to repayments even as the net borrowing may not be as high, the source said. – Reuters
