Second wave may not derail ₹5.5 lakh cr FY22 capex plan
NEW DELHI: The finance ministry believes the government’s ambitious ₹5.5 lakh crore capex plan for 2021-22 (Fy22)—part of a strategy to try and revive growth by boosting investment in infrastructure—is unlikely to get derailed by the second wave of the Covid-19 pandemic.
A finance ministry official under condition of anonymity said since there are no expenditure curbs on government departments this year and migrant labourers are expected to return to work with a decline in Covid-19 cases, the government does not see any major delay in restarting its infrastructure investment cycle.
“We don’t see any major delay and any short term delay can be recovered within the year. Resumption of activity this time will happen faster than last year. Once these lockdowns are over—may be in a month or two—i think there should be a quick resumption. This time the trains have not been stopped. Trains are still running. Migrants who go home can also come back quickly.”
Out of the ₹5.5 lakh crore capex plan, ₹1.4 lakh crore is for defence and ₹4.1 lakh crore for non-defence sectors. The two major heads for non-defence capex are railways and roads, accounting for ₹2.15 lakh crore.
Finance minister Nirmala Sitharaman in her FY22 budget speech said she has set aside more than ₹44,000 crore for projects that show good progress on capital expenditure and are in need of further funds.
“Over and above this expenditure, we would also be providing more than ₹2 lakh crore to states and autonomous bodies for their capital expenditure,” she added.
But Madan Sabnavis, chief economist at Care Ratings said the pandemic-induced lockdown means government revenues will be affected.
“GST collections have been very good in April but will come down in May for sure. Hence there will be pressure on balancing revenue and capex. Normally capex is weak till the end of monsoon as it is not possible to go ahead with construction projects which are affected by rains. Therefore, there will be more pressure to expedite projects such as in railways to ensure that there is a boost to infra. We may expect a pick-up mostly in the third quarter, with the second quarter capex being focused more on non-construction-based capex,” he added.
A query sent to the finance ministry remained unanswered till the time of going to the press.