New Delhi, November 26: A Crisil report said capital expenditure or capex of states nearly quadrupled to Rs 6 lakh crore from Rs 1.7 lakh crore between fiscals 2011 and 2019, as a result of which the share of states in the combined capex of Centre and states jumped to 65 per cent from 52 per cent.
Capex by the states and the Centre has increased over the years. As of FY11 there was a slight difference between the the Centre and state, states spent 1.7 lakh crore while the Centre spent 1.6 lakh crore. But by FY18 that difference ballooned marginally. In FY18, the states spent 4.3 lakh crore and the Centre spent 2.6 lakh crore as capex.
The report highlights that 15 largest states accounted for 83 per cent of all capex spent by states. Capex of the 15 large non-special category states doubled from Rs 8.5 lakh crore over fiscals 2010 to 2014 to Rs 17 lakh crore from fiscals 2015 to 2019, and accounted for 83 per cent of the Rs 20.5 lakh crore spent by all states.
This was supported by 73 per cent growth in their revenue receipts, which grew from Rs 16 lakh crore in fiscal 2015 to Rs 28 lakh crore in fiscal 2019. The four leaders garnered 27 per cent of revenue receipts of all states in fiscal 2019, and contributed 27 per cent of capex between fiscals 2015 and 2019.
The four middle-of-the-pack states as termed by the report consists Andhra Pradesh, Kerala, Haryana, Punjab, and Telangana fetched 17 per cent of revenue receipts of all states in fiscal 2019, and contributed to 15 per cent of capex between fiscals 2015 and 2019.
The six climbers – Uttar Pradesh, Bihar, Madhya Pradesh, Rajasthan, West Bengal, and Odisha garnered 39 per cent of revenue receipts of all states in fiscal 2019, and contributed 41 per cent of all capex of all states between fiscals 2015 and 2019.
This report throws light on the financial health of the six climbers and said: “With relatively lower per capita income, they have vulnerable public finances, relatively weak institutional frameworks, and lower private sector presence in their economies. But the capex spike of these states possibly suggests their capacity to implement investments is improving.”
The rating agency also recommended that states should expand fiscal space to invest through asset monetisation and expenditure reforms; look for avenues for commercial financing and adopt appropriate PPP models.