Nearly Half of Disinvestment Target Met, 60% Capex Spent: Survey

Out of the budgeted amount of ₹65,000 crore for FY23, 48 per cent has been collected as of 18 January 2023 as the pandemic-induced uncertainty, the geopolitical conflict, and the associated risks have posed challenges before the plans and prospects of the government's disinvestment targets over the last three years, stated the Economic Survey 2022-23. The Survey added that government has reaffirmed its commitment towards privatisation and strategic disinvestment of Public Sector Enterprises by implementing the New Public Sector Enterprise Policy and Asset Monetisation Strategy.

Capital expenditure: According to the Survey, the capital expenditure by the Central Government has steadily increased from a long-term average 2.5 per cent of GDP in FY22 PA. It is further budgeted to increase to 2.9 per cent of GDP in FY23 highlighting an improvement in the quality of government expenditure over the years.

The Survey stated that Rs 7.5 lakh crore of Capital Expenditure is budgeted for FY23, of which more than 59.6 per cent has been spent from April to November 2022. During this period, capital expenditure registered a YoY growth of over 60 %, much higher than the long-term average growth of 13.5 per cent recorded in the corresponding period from FY16 to FY20. The Survey stated that Rs 1.5 lakh core were allocated to road transport and highways, Rs 1.20 lakh crore to railways, 0.7 lakh crore to defence and 0.3 lakh crore to telecommunications in FY22. It is considered as a counter-cyclical fiscal tool strengthening aggregate demand, generates employment and boosts other sectors, it added.

To push for enhancing Capex from all directions, the centre announced several incentives to boost states' capital expenditure in the form of long-term interest-free loans and capex-linked additional borrowing provisions, the survey said.

Revenue Expenditure: The revenue expenditure of the Union government was brought down from 15.6 per cent of GDP in FY21 to 13.5 per cent of GDP in FY22 Provisional Actual (PA). This contraction was led by a reduction of the subsidy expenditure which was brought down from 3.6 per cent of GDP in FY21 to 1.9 per cent of GDP in FY22 PA. It was further budgeted to reduce to 1.2 per cent of GDP in FY23. However, around 94.7 per cent of the budgeted expenditure on subsidies has been utilised from April to November 2022 due to the sudden outbreak of geopolitical conflict resulting in higher international prices for food, fertiliser and fuel. Thus, the revenue expenditure from April to November 2022 has grown by over 10 per cent on a YoY basis, higher than the growth noted in the corresponding period last year, the Survey said.

Interest payments as a proportion of receipts went up after the pandemic outbreak. However, in the medium term, as we move along the fiscal glide path, buoyancy in revenues, aggressive asset monetisation, efficiency gains, and privatisation would help pay down the public debt, thus bringing down interest payments and releasing more monies for other priorities, highlights the Economic Survey.

State Government Finances: The combined Gross Fiscal Deficit (GFD) of the States, which increased to 4.1 per cent of GDP in FY21, was brought down to 2.8 per cent in FY22 (PA). Given the geopolitical uncertainties, the consolidated GFD-GDP ratio for States has been budgeted at 3.4 per cent in FY23. However, from April- November 2022, the combined borrowings of the 27 major states have just reached 33.5 per cent of their total budgeted borrowings for the year. The data from the last three years shows that states had unutilised borrowing limits, it said.