State investment spending healthy so far in 2021

Tamil Nadu spent 16,493.37 crore through October 2021 on capital expenditure, which is about 39.1% of 42,180.96 crore, budgeted for 2021-2022, according to provisional figures from the Controller and Auditor general (CAG). Capital expenditures include capital expenditures that lead to the creation of assets such as schools, hospitals, roads and bridges and help improve economic activity and create jobs.

Capital expenditure also includes the repayment of loans. Analysts said that although the current trend is healthy, it would be difficult to maintain the level of capital spending in the future.

The state’s capital expenditure for the current fiscal year is budgeted at about 14% of its total expenditure. Capital spending so far is better than the year before, when 29% of the budgeted amount was committed, said Kavita Chacko, senior economist, CareEdge.

“Capital expenditure is not distributed very evenly over the months of a year. There are two methods of understanding whether the level of spending is adequate or not – how it compares to the same month in previous years, if the government catches up to its spending by the end of the year, and how it compares to others. States, Mr Saket Surya, said a senior analyst at PRS Legislative Research.

“If we see the trends over the past year on average, Tamil Nadu is spending 29% of the capital expenditure budgeted in October of this year. In comparison, he is doing better this year, ”he said. Mr Surya said Tamil Nadu generally spends less on capital spending than it budgets. For example, in 2015-2020, he spent 18% less. By comparison, Karnataka is faring much better as its spending was only 3% lower than budgeted capital spending in 2015-20.

Karnataka is among the states with the fewest discrepancies in budget estimates and actuals, he added, and pointed out that even Karnataka had spent 39% of its budgeted capital spending until October. 2021. By following these trends, for the moment, Tamil Nadu seems very well placed to reach its target of down payment by March 2022, he added. Surya said the Center released the full back-to-back GST offset loan for fiscal year 2021-2022, which contributed to capital spending. Tamil Nadu got 8,095 crore on this account, which is about 19% of its budgeted capital expenditure.

Sustaining the down payment would be difficult for Tamil Nadu, he said due to issues such as high interest payments, the end of GST compensation subsidies after June 2022 and a high level of spending. for wages, interest, pensions and the income deficit. It is estimated that Tamil Nadu will spend around 66% of its revenue on the payment of salaries, interest and pensions in 2021-2022.

By comparison, the all-state average is around 55% in 2021-2022, Surya said.