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What is the News?
States have raised apprehensions about the rise in capital expenditure proposals outlined in the Union Budget 2022-23.
What has the Budget announced on the capital expenditure?
The Budget has proposed an increase in the capital expenditure by 24% to Rs 7.5 lakh crore compared with the revised estimate for 2021-22 at Rs 6.02 lakh crore.
This expenditure increase comes along with an increase in the state borrowing limit to 4% of the GSDP. States have also been allowed to borrow up to Rs 1 lakh crore through 50-year interest-free loans to make capital investments.
The government had also made provision of over Rs 2 lakh crore for states and autonomous bodies towards their capital expenditure.
| Must read: Union Budget 2022-23: Highlights and Concerns – Explained, pointwise |
What are the concerns raised by the States?
Firstly, the increased capital expenditure allocation comes at the cost of a reduction in grants in aid, revenue deficit grants, subsidies for food, fertilizer, fuel and allocation for MGNREGA.
Secondly, so far the money given to states for various schemes was in the form of grants. But the revised estimates have reduced the allocation for grants and schemes, and they have been labelled as interest-free loans. This is a way to keep the revenue deficit in check and show a higher capex.
Source: This post is based on the article “Explained: Why are states worried about high capex in Budget 2022?” published in Indian Express on 14th Feb 2022.
