Slow start to government expenditure

by Manasi Swamy

The Central Government’s expenditure programme for 2022-23 had a rather slow start. In April 2022, the government spent Rs.2.7 trillion. This was 21.2 per cent higher than its year-ago expenditure. Despite this rise, the expenditure in April 2022 was not even 7 per cent of its annual budgeted amount of Rs.39.4 trillion for the fiscal year 2022-23. This is low not only on pro-rata basis, but also in comparison to the Modi government’s track record. Since it first came in to power in May 2014, the Modi government has been spending 9.4 per cent of its annual budgeted expenditure on an average in the first month of the fiscal year itself. The only exception to this was 2021-22, when April accounted for only 6.5 per cent of the annual budgeted expenditure.

In April 2022, the government scaled up capital expenditure. This grew year-on-year by 67.5 per cent to Rs.789 billion. The government expended 10.5 per cent of its annual budgeted capital expenditure. Revenue expenditure increased year-on-year by 9.1 per cent. But, at Rs.2 trillion in April 2022, it accounted for 6.1 per cent of its annual target. The government could have incurred an additional revenue expenditure of about Rs.500 billion in April 2022 on a pro-rata basis.

The single largest component of the Central Government’s annual revenue expenditure - interest outgo increased year-on-year by a steep 39.2 per cent to Rs.412.9 billion in April 2022. The government traditionally clears a bulk of its interest liabilities in the last months of every quarter. The April 2022 interest outgo therefore accounted for only 4.4 per cent of its annual budgeted outgo despite recording a sharp year-on-year increase.

The government spent 36 per cent more towards pensions, both civil and defence, in April 2022 compared to April 2021. The Rs.127.5 billion spending, however, was only 6.9 per cent of the annual budgeted expenditure.

The government was seen postponing its subsidy payments. It spent only Rs.50 billion on food subsidy in April 2022. This is despite the Food Corporation of India (FCI) having raised subsidy claims of Rs.1.3 trillion during the month. Including carry forward dues of last year, the government owed Rs.1.4 trillion to the FCI at end-April 2022. This does not include the subsidy on account of extension of PMGKAY Scheme which is going to cost Rs.800 billion to the government over and above its budgeted food subsidy burden of Rs.2.1 trillion for 2022-23.

The government spent Rs.52 billion towards fertiliser subsidy in April 2022. It had budgeted for Rs.1.05 trillion of fertiliser subsidy for 2022-23. Finance Minister Nirmala Sitharaman allocated another Rs.1.1 trillion for fertiliser subsidy in May 2022, taking the total allocation for 2022-23 up to Rs.2.15 trillion.

The centre disbursed only Rs.3.9 billion towards the rural employment guarantee scheme MGNREGS in April 2022 out of the annual budgeted provisioning of Rs.730 billion. The disbursal was 77.6 per cent lower than that in April 2021. Fund disbursals under the scheme picked up in May 2022. According to the official website of MGNREGS, the centre disbursed Rs.111.2 billion in May 2022, which was 12.4 per cent higher than disbursal made during the same month a year ago.

No fund disbursals were made towards the PM-KISAN scheme in April 2022. It is only in May 2022 that the centre disbursed an instalment of Rs.210 billion for the period April-June 2022.

Revenue transfers to states and UTs declined by 48 per cent to Rs.151.1 billion in April 2022 from April 2021. These were at 4.5 per cent of their annual budgeted target for 2022-23.

There was a lull on clearance of GST compensation dues to the states in April 2022. But, on May 31, 2022, the centre released Rs.869.1 billion to cover the entire amount of GST compensation due to states till date.

The Centre was also keen on implementing its own capital expenditure programme for 2022-23 successfully. It utilised 10.5 per cent of its annual budgeted provisioning for capital expenditure of Rs.7.5 trillion in the very first month of 2022-23 itself.

Of the Rs.789.2 billion capital expenditure in April 2022, a bulk was accounted by the Ministry of Road Transport & Highways and the Ministry of Railways. These spent Rs.403.2 billion and Rs.182 billion, respectively. Capital expenditure by the Ministry of Road Transport & Highways reported in April 2022 was 51.1 per cent of its budgeted annual allocation, while that by the Ministry of Railways was 23.1 per cent of its budgeted annual allocation. The Controller General of Accounts (CGA) reported Rs.100 billion of capital expenditure by the Ministry of Consumer Affairs, Food & Public Distribution in April 2022. The Union Budget 2022-23 had not made any provision for this capital expenditure. Only Rs.20.3 billion were been allocated to the ministry for capital spending in 2022-23. Details of this expenditure have not been disclosed by the CGA. Capital expenditure by rest of the ministries in April 2022 was miniscule.

Finance secretary T V Somanathan has assured that the central government is not going to trim its capital expenditure plan for 2022-23 to compensate for the Rs.1.5 trillion revenue impact of the recent measures announced for reining in inflation. He added that the government would instead make every effort to cut its avoidable revenue expenditure. It can be noted that the Finance Minister has already announced a large subsidy expenditure over and above the budget provisions for 2022-23. She has promised additional fertiliser subsidy of Rs.1.1 trillion and extension of PMGKAY till September 2022 at a cost of Rs.800 billion.

CMIE STATISTICS
Unemployment Rate (30-DAY MVG. AVG.)
Per cent
8.0 +1.3
Consumer Sentiments Index
Base September-December 2015
68.4 +0.8
Consumer Expectations Index
Base September-December 2015
67.6 +0.9
Current Economic Conditions Index
Base September-December 2015
69.7 +0.7
Quarterly CapEx Aggregates
(Rs.trillion) Jun 21 Sep 21 Dec 21 Mar 22
New projects 2.94 3.26 3.53 5.91
Completed projects 0.71 1.28 2.76 1.15
Stalled projects 0.33 0.28 0.06 0.30
Revived projects 1.14 0.39 2.07 0.28
Implementation stalled projects 0.64 0.26 0.65 0.07
Updated on: 25 Jun 2022 8:28PM
Quarterly Financials of Listed Companies
(% change) Jun 21 Sep 21 Dec 21 Mar 22
All listed Companies
 Income 42.3 27.5 23.4 21.6
 Expenses 41.8 26.7 21.3 20.5
 Net profit 140.6 55.3 35.4 32.8
 PAT margin (%) 8.9 9.6 9.0 9.1
 Count of Cos. 4,564 4,690 4,733 4,508
Non-financial Companies
 Income 61.1 35.7 29.1 25.9
 Expenses 62.4 36.0 28.8 26.6
 Net profit 195.2 59.5 19.0 12.9
 PAT margin (%) 8.4 8.8 7.5 7.9
 Net fixed assets 4.9 2.2
 Current assets 10.8 15.3
 Current liabilities 0.8 11.7
 Borrowings 12.1 3.7
 Reserves & surplus 12.4 11.5
 Count of Cos. 3,336 3,387 3,428 3,280
Numbers are net of P&E
Updated on: 25 Jun 2022 8:28PM
Annual Financials of All Companies
(% change) FY20 FY21 FY22
All Companies
 Income 0.6 -1.1 13.6
 Expenses 0.4 -3.4 10.5
 Net profit -4.4 72.2 58.0
 PAT margin (%) 2.0 4.5 10.9
 Assets 9.0 9.7 9.3
 Net worth 4.8 11.7 9.9
 RONW (%) 3.4 6.9 13.5
 Count of Cos. 32,455 29,998 539
Non-financial Companies
 Income -1.2 -2.3 26.3
 Expenses -1.0 -4.4 25.6
 Net profit -20.8 63.5 42.2
 PAT margin (%) 2.2 4.2 13.8
 Net fixed assets 11.2 2.0 -1.9
 Net worth 2.2 10.7 11.2
 RONW (%) 4.7 8.0 22.6
 Debt / Equity (times) 1.2 1.0 0.3
 Interest cover (times) 1.9 2.5 10.3
 Net working capital cycle (days) 81 85 16
 Count of Cos. 25,743 23,675 386
Numbers are net of P&E
Updated on: 20 Jun 2022 11:46AM