{"id":322752,"date":"2025-01-08T17:49:34","date_gmt":"2025-01-08T12:19:34","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=322752"},"modified":"2025-01-08T17:49:34","modified_gmt":"2025-01-08T12:19:34","slug":"union-government-capex-declines-challenging-fiscal-stability","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/union-government-capex-declines-challenging-fiscal-stability\/","title":{"rendered":"Union government capex declines, challenging fiscal stability."},"content":{"rendered":"

Source<\/strong>: The post Union government capex declines, challenging fiscal stability has been created, based on the article \u201cAn opportunity in capex decline<\/strong>\u201d published in \u201cBusiness Standard<\/strong>\u201d on 8th January 2025<\/p>\n

UPSC Syllabus Topic:<\/strong> GS Paper3- Economy- Government Budgeting.<\/p>\n

Context<\/strong>: The article discusses the decline in the Union government’s capital expenditure, mainly in roads, defence, and telecom. It highlights underutilized funds, delayed equity infusion in BSNL, and unspent allocations for new schemes, suggesting potential fiscal adjustments to manage revenue shortfalls.<\/p>\n

For detailed information on Union Budget 2024-25- Analysis<\/strong> read this article here<\/a><\/p>\n

What is the Current State of the Union Government’s Expenditure?<\/strong><\/h2>\n
    \n
  1. The Union government’s capital expenditure (capex) has decreased by 12% from April to November 2024 compared to the same period in 2023.<\/li>\n
  2. Despite a target of 17% growth to \u20b911.11 trillion for 2024-25, the government might struggle to exceed the previous year’s \u20b99.48 trillion.<\/li>\n
  3. Revenue expenditure is showing a better trend, increasing from 2% growth at the end of June 2024 to 7.8% by November 2024, with a budget projection of a 6% rise for the year.<\/li>\n<\/ol>\n

    Why is the Union Government\u2019s Capital Expenditure Declining?<\/strong><\/h2>\n
      \n
    1. While some blame the seven-phase general elections (April-June 2024) for slowing capex, the trend did not reverse in later months.<\/li>\n
    2. Even after the elections, the April-November period still saw a decline of 12%, reflecting deeper structural issues.<\/li>\n<\/ol>\n

      What are the impacts of Union Government\u2019s Capital Expenditure Declining?<\/strong><\/h2>\n
        \n
      1. Over 90% of total capex is concentrated in six sectors: roads, railways, defence, telecom, transfers to states, and new schemes.<\/li>\n
      2. However, major declines were seen in:<\/li>\n<\/ol>\n