Sharpest Rise in Spending by Indian Railways reflect Centre’s priority to revamp Rail Infrastructure

Of the Top-10 ministries in terms of spending, six including Railways, Rural Development, Roads and Highways and Agriculture registered handsome increases in expenditure in the first quarter of FY19.

NEW DELHI: Of the top ten ministries in terms of spending capacity, six including rural development, roads and highways, agriculture and railways registered handsome increases in expenditure in the first quarter of FY19, reflecting the Central Government’s priority areas and its continuing stress on public expenditure to prop up economic growth.

On a year-on-year basis, the budgetary spending increase in the April-June 2018 quarter was the sharpest for the Indian Railways (133%) and the ministry of roads and highways or MoRTH (58.5%).

Of course, the relevant sectors also spend substantial amounts raised via borrowings from the market and institutional sources (for instance, of the railways’ capital spending, over 60% is from extra-budget resources and MoRTH/NHAI gets less than a third of its investible funds from the Union Budget).

Among the other ministries which are conventionally high spenders, chemicals and fertilisers, human resource development and food & consumer affairs saw their spending decline from a year ago in the June quarter (see chart)— in case of the first two ministries, the curbs being imposed on subsidies (Q1FY18 saw more-than-usual releases of subsidies) led to reduced spending. Expenditure on major subsidies (food, fertiliser and fuel) declined 16% y-o-y in the Q1FY19.

The Centre’s budgetary capital expenditure in April-June 2018 stood at Rs 86,988 crore, 27% higher than the same in the year-ago quarter and 29% of the full-year target.

Among the other ministries, power ministry spent 53% of its annual budget allocation in the first quarter compared to just 19% of the corresponding target in the year-ago period. Similarly, the textiles ministry spent 44% and the drinking water and sanitation ministry spent 42% of its respective FY19 targets in the June quarter compared with 19% and 25%, respectively, a year ago.

The housing and urban poverty alleviation ministry, which administers the Pradha Mantri Awas Yojana (Urban), could spend only 23% of the budget in Q1 this year compared to 43% a year ago.

While the Centre’s spending, especially capex, is strong, the state governments seem to have applied brakes on their capex to curb borrowings and remain on the fiscal consolidation path. Data review of 14 states show that their aggregate capex in April-June this fiscal was Rs 30,922 crore, just 11% of the combined annual target and 19% lower than what was achieved in the year-ago period.