
Centre will sustain capex: Expenditure secretary Manoj Govil

Summary
- States will also increase their borrowing under the Centre’s Special Assistance for Capital Investment scheme, potentially exceeding the limits set in the revised estimates, says expenditure secretary Manoj Govil.
NEW DELHI : The central government will maintain its focus on capital expenditure in the final quarter of 2024-25, and the year ahead, despite a dip in the first half of the year, expenditure secretary Manoj Govil said on Monday.
States will also increase their borrowing under the Centre’s Special Assistance for Capital Investment scheme, potentially exceeding the limits set in the revised estimates, he added.
Speaking to Mint, Govil said while states have borrowed about ₹1.09 trillion till January from the Centre under the scheme, which provides 50-year interest-free loans, they could exceed the budgeted estimates of ₹1.25 trillion in the fiscal year.
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"We want states to spend more, and states are spending more as well (on capital expenditure)," Govil added.
He said the central government remains committed to capital infrastructure spending, with grants-in-aid for capital assets set to rise to " ₹4.27 trillion in 2025-26 from about ₹2.99 trillion in the 2024-25 revised estimates, pushing the budget’s effective capital expenditure allocations to ₹15.5 trillion, up 17.4% from ₹13.2 trillion in the previous year."
"The money which the Government of India spends either directly through its own agencies or indirectly through state governments, results in the formation of capital assets," he said.
"So, I would say the budget is still very much focused on increasing capital expenditure," he added.
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Government spending
In 2023-24, capital expenditure by the Centre, Central Public Sector Enterprises (CPSEs), and state governments reached ₹17.35 trillion, or 5.87% of gross domestic product (GDP), marking an increase from ₹13.57 trillion, or 5.03% of GDP, in 2022-23, according to data from the finance ministry.
However, after reaching a five-year high of 5.87% of GDP in 2023-24, this capital expenditure slowed in 2024-25 due to lower spending in the first two quarters, largely because of the general elections in 2024.
According to the budget estimates for 2024-25, the Centre's capital expenditure plans stand at about ₹11.11 trillion, up from ₹10 trillion from the previous budget.
However, these estimates have been revised to ₹10.18 trillion for 2024-25 in the latest budget presented on 1 February, while the capex for 2025-26 has been estimated at ₹11.21 trillion.
On fertilizer subsidies, Govil said the allocation remains similar for now but could be increased through supplementary grants if international fertiliser and oil prices fluctuate, impacting the cost.
Also Read: Union Budget 2025: Govt dials up consumption and walks the fiscal talk
"So, if the prices are favourable, subsidy output is likely to be less. If the prices go up higher, they might be more. We will see, over the year, how the scenario will work," he said.
"So, if needed, it could be revised. Now of course, in the past year also, we have revised subsidy works," he added.
Fertilizer subsidies make essential nutrients more affordable for farmers, boosting crop yields, enhancing food security, and keeping food prices stable, particularly in developing countries.
However, if not managed properly, they can lead to overuse, soil degradation, and environmental concerns.
The fertilizer subsidy allocation for 2025-26 is set at ₹1.67 trillion, slightly lower than the revised estimates of ₹1.71 trillion for the current fiscal.
During 2024-25, the government earmarked ₹1.88 trillion for the subsidy.