<p>New Delhi: Capital outlay of top 18 states, which account for around 90% of the aggregate gross state domestic product in the country, is likely to increase by 18-20 per cent in the current financial year, sharply higher than 14% growth registered in 2022-23, rating agency CRISIL said on Tuesday. </p>.<p>In the first six months of the current financial year the capital outlays of these states surged by 52 per cent year-on-year. However, a moderation in pace is likely in the second half, said Anuj Sethi, senior director, CRISIL Ratings.</p>.<p>For the fiscal 2023-24, states have budgeted an average 43% increase in their capital outlays when compared with the previous year. If actual spending continues at past averages of 82-85 per cent of the budgeted outlay, it would translate to 18-20 per cent growth this fiscal, CRISIL said in a note. </p>.<p>The rating agency further noted that the increase in spending will be supported by healthy goods and services tax (GST) collection, stable and upfront devolution from the central government (share in central taxes), and allocation of Rs 1.3 lakh crore (Rs 1 lakh crore budgeted last fiscal) in the form of interest-free loans to all the states for capital expenditure (capex). </p>.<p>The centre transferred Rs 4.5 lakh crore to states during April-September period of the current financial year, which is 21 per cent higher when compared with the same period last year. </p>.<p>“We believe that government capex has a higher multiplier effect on economic output compared with the revenue expenditure,” CRISIL noted in its report. The multiplier works to ‘crowd in’ private investment, inducing increase in investments in the economy, contributing to economic growth and supporting the overall credit outlook for states. </p>.<p>In terms of sectoral mix, on average over the past five years, transport (especially roads and bridges) has 22-26 per cent share in the total capital outlays of states, followed by irrigation (15-20 per cent) and water supply & sanitation (15-20 per cent). </p>.<p>Other segments such as energy, agriculture, rural development, health and education account for 3-6 per cent share each. </p>.<p>Water supply and sanitation segment, which includes housing and urban development, is expected to post over 20 per cent increase in outlay this fiscal, said Aditya Jhaver, director, CRISIL Ratings. </p>.<p>Central government schemes such as Jal Jeevan Mission, Swachh Bharat Mission, and Atal Mission for Rejuvenation and Urban Transformation, as well as state-specific outlays towards metro projects, infrastructure development for cities, and support provided to urban local bodies, will spur growth in this segment. </p>.<p>Irrigation segment is also expected to see a strong uptick of 19-21% led by increasing budgets by key states.</p>
<p>New Delhi: Capital outlay of top 18 states, which account for around 90% of the aggregate gross state domestic product in the country, is likely to increase by 18-20 per cent in the current financial year, sharply higher than 14% growth registered in 2022-23, rating agency CRISIL said on Tuesday. </p>.<p>In the first six months of the current financial year the capital outlays of these states surged by 52 per cent year-on-year. However, a moderation in pace is likely in the second half, said Anuj Sethi, senior director, CRISIL Ratings.</p>.<p>For the fiscal 2023-24, states have budgeted an average 43% increase in their capital outlays when compared with the previous year. If actual spending continues at past averages of 82-85 per cent of the budgeted outlay, it would translate to 18-20 per cent growth this fiscal, CRISIL said in a note. </p>.<p>The rating agency further noted that the increase in spending will be supported by healthy goods and services tax (GST) collection, stable and upfront devolution from the central government (share in central taxes), and allocation of Rs 1.3 lakh crore (Rs 1 lakh crore budgeted last fiscal) in the form of interest-free loans to all the states for capital expenditure (capex). </p>.<p>The centre transferred Rs 4.5 lakh crore to states during April-September period of the current financial year, which is 21 per cent higher when compared with the same period last year. </p>.<p>“We believe that government capex has a higher multiplier effect on economic output compared with the revenue expenditure,” CRISIL noted in its report. The multiplier works to ‘crowd in’ private investment, inducing increase in investments in the economy, contributing to economic growth and supporting the overall credit outlook for states. </p>.<p>In terms of sectoral mix, on average over the past five years, transport (especially roads and bridges) has 22-26 per cent share in the total capital outlays of states, followed by irrigation (15-20 per cent) and water supply & sanitation (15-20 per cent). </p>.<p>Other segments such as energy, agriculture, rural development, health and education account for 3-6 per cent share each. </p>.<p>Water supply and sanitation segment, which includes housing and urban development, is expected to post over 20 per cent increase in outlay this fiscal, said Aditya Jhaver, director, CRISIL Ratings. </p>.<p>Central government schemes such as Jal Jeevan Mission, Swachh Bharat Mission, and Atal Mission for Rejuvenation and Urban Transformation, as well as state-specific outlays towards metro projects, infrastructure development for cities, and support provided to urban local bodies, will spur growth in this segment. </p>.<p>Irrigation segment is also expected to see a strong uptick of 19-21% led by increasing budgets by key states.</p>