18 states see upsurge in tax revenue, but miss capex goal

Mumbai, Dec. 4: Capital expenditure (capex) of 18 states has risen just 2.2 per cent in the first half of the current fiscal even as their combined revenue deficit has narrowed to more than onefourth from the year-ago period, according to a report.

This means that there has to be a massive 57 per cent increase in their capital outlays to meet their FY23 budgeted target, Icra Ratings said in an analysis on the available numbers from 18 of the largest states, which have budgeted for a combined capital outlay of `6.2 lakh crore. But these states have collectively spent only `1.59 lakh crore so far this fiscal, which is just about a growth of 2.2 per cent annualised.

Revenue deficits of these 18 states have narrowed to a low `30,000 crore in the first half of the current fiscal from `1.3 lakh crore in the corresponding period in FY22.

This revenue tailwind comes in spite of these states budgeting for a combined revenue deficit to `1.4 lakh crore in FY23 from `1.1 lakh crore in FY22.

Despite this, their combined capital outlay rose by a muted 2.2 per cent in H1, sharply lower than the high 37.8 per cent growth indicated in their budgets, necessitating a sharp 57 per cent increase in H2 to achieve the target, the agency said in a weekend note.

The 18 states covered in this note are Andhra Pradesh, Chhattisgarh, Gujarat, Haryana, Himachal, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh, Uttarakhand and Bengal.

These states have budgeted a combined capital outlay of `6.2 lakh crore for this fiscal. This means that to use the budgeted outlay their spending will have to jump by 57 per cent (or by 4.6 lakh crore) in the second half of the fiscal to meet the 37.8 per cent increased capex, which looks ambitious and thus the states are going to miss the capital outlay target by a sizeable extent, it said.

These states saw their combined revenue rising by 27 per cent to `13.9 lakh crore in the first half of FY23 from `10.9 lakh crore in H1FY22, on better tax collections.

The states’ tax revenues rose a higher 28.6 per cent in the first half year-onyear. The combined revenue receipts of 18 states were equivalent to 43 per cent of the budget estimate and higher than the year-ago period but lower than H1 FY20.

● The 18 states have collectively spent only `1.59 lakh crore so far this fiscal, which is just about a growth of 2.2 per cent annualised.