57% growth needed in H2 FY23 capital outlay for 18 Indian states: ICRA

In October this year, there has been an encouraging step up in disbursements under the government’s capex scheme to the states. Nevertheless, unless the execution of capital projects picks up considerably in H2 FY23, the states’ capital outlay target for FY23 could be missed by a sizeable extent, the Indian ratings agency noted in a release.

Revenues in H1 FY23 were close to 27 per cent higher than the year-ago levels, led by tax revenues: The combined states’ own tax revenues (SOTR), as per the provisional actuals (PA) of 18 states, were 28.6 per cent higher in H1 FY23 than the level in H1 FY22.

Among these states, Chhattisgarh, Gujarat, Karnataka, Maharashtra, Tamil Nadu and West Bengal had already received 50-53 per cent of their budgeted SOTR for FY23, in H1 FY23.

Additionally, benefitting from higher devolution in August 2022 relative to the previous months, and reflecting the highly back-ended release of such transfers in FY22, the devolution of taxes from the GoI to the states expanded by a sharp 44.6 per cent in H1 FY23 on a YoY basis, ICRA said.

Despite healthy improvement in revenue deficit, capital outlay grew by a muted 2.2 per cent in H1 FY23: The combined revenue spending of the 18 states increased by 15.3 per cent in H1 FY23 from H1 FY22 and was equivalent to nearly 42 per cent of the FY23 BE, the ratings agency noted.

Combined revenue receipts of 18 states expanded by nearly 27 per cent in H1 FY23 on a YoY basis, comprising about 43 per cent of their budgeted levels.

ALCHEMPro News Desk (DS)