18 of the 23 states performed better on capex spend in Q1 of FY24: Bank of Baroda

economictimes.indiatimes.com:

Bank of Baroda economists. “This bodes well for India’s growth trajectory going forward,” the BoB note pointed out on Wednesday, calling it an encouraging trend. The note also highlighted that the centre’s assistance to states for interest-free loans had also witnessed a substantial uptick.

“Approvals under this scheme have already crossed 40% of the total allocation for this year, which also suggests there has been a substantial pickup in state capex,” said Aditi Gupta, economist, Bank of Baroda. While five states, namely, Chhattisgarh, Gujarat, Himachal Pradesh, Karnataka and Maharashtra, had capex spending lower than last year, the overall capex expenditure of states was up 73.9% compared to the previous year—rising more than the Centre. While Andhra Pradesh spent 40.8% of its budgeted capital expenditure in Q1FY24 compared with 7% last year, the capex spending of Karnataka at 3.4% in the April-June quarter of FY24 was lower than the 10.3% spent last year.

However, the spending as a proportion of the total capex budgeted for the 23 states for FY24 was still lower than the Centre’s spending of 27.8%. “The picture remains quite sombre. Based on data available for a total of 23 states, out of a budgeted capital expenditure of Rs 7.98 lakh crores, actual capex is only Rs 1.06 lakh crores, which is just 13.3% of the Budgeted amount,” Gupta stated.

The government capital spending has reflected in industrial activity numbers, where government capex-related sectors like steel and cement have witnessed double-digit increases. The core sector growth data released on July 31 showed an 8.2% jump in June, the fastest in five months. Data on industrial activity for June is due to be released on July 11.