Centre's FY23 capex challenge: Realistic, a mirage, or a tall order?

moneycontrol.com:

Finance Minister Nirmala Sitharaman looked to retain the government's focus on capital expenditure by setting aside a mammoth Rs 7.50 lakh crore for the same for FY23. However, questions have been raised about the nature of this target: is it realistic, overstated, or just a huge challenge?

To answer this question, it is best to break down the headline number into its various components and arrive at the exact size of the government's task.

Of the Rs 7.50 lakh crore, a sizable chunk, Rs 1 lakh crore, is an interest-free, 50-year loan to State governments for their capital expenditure, up from Rs 15,000 crore in FY22.

Apart from the Centre's budgetary support, one must also account for the capital resources of public sector enterprises (PSEs). These, called internal and extra-budgetary resources (IEBR), have fallen in FY23.

The Budget pegs IEBR for FY23 at Rs 4.69 lakh crore, down 6.6 percent from the revised estimate and 19.5 percent from the budget estimate for FY22.

The sum of the Centre's gross budgetary support and IEBR, less the interest-free loan to States, results in Central government and public sector capital expenditure of Rs 11.20 lakh crore for FY23 — 2.7 percent higher than the revised estimate but 0.7 percent lower than the budget estimate for FY22.

But we are not done yet. PSEs and departmental undertakings are responsible for a lot of capital expenditure and their endeavors are supported by the Centre via equity infusions and loans. And FY23 has seen this component increase notably.

The budget documents show that the Central government infused Rs 2.23 lakh crore as equity in public enterprises in FY22, with another Rs 22,955 crore extended as loans. For FY23, these numbers are expected to rise to Rs 3.34 lakh