Most States failed to meet their FY23 capex targets

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Large States like Uttar Pradesh and Maharashtra faltered significantly in their ambitious capital spending plans for 2022-23 while just six States managed to come close to meeting their capex targets, as per a Bank of Baroda report based on data from 25 States.

While the Centre met its infrastructure spending targets last year, as per its stated commitment to pump prime the economy till private investments rebound, States’ performance has been disparate and disappointing, the report noted. 

The 25 State governments for whom data is available now managed to spend only 76.2% or ₹5.71 lakh crore from their planned capex of ₹7.49 lakh crore for 2022-23.

“The two largest states in terms of planned capex, UP and Maharashtra had an outlay of ₹2.19 lakh crore which is 29.2% of the total capex of these 25 states. Their combined achievement was just 70% which has brought down the average for the entire sample,” the Bank’s economic research team pointed out.

The worst performance was recorded in Andhra Pradesh, which met just 23% of its capex target, followed by Tripura, Nagaland and Haryana which had less than 50% achievement.

Only four States—Karnataka, Sikkim, Arunachal Pradesh and Bihar—met or exceeded targets while Jharkhand and Madhya Pradesh came very close at over 98% of the target. Eleven states had crossed the 80% threshold, including Tamil Nadu (89.9%) and Gujarat (89.5%).

“The under-achievement phenomenon is not really new as the rate was around 72% in 2019-20, though it had improved to 95% in 2021-22. The states certainly have to improve their record here in order to push forward the investment cycle as the private sector will take some time before coming in a broad based manner,” the report concluded.