India’s Top 18 States to Increase Capital Spending by 7-9% in 2024-25
In the financial year 2024-25, the capital spending of India’s top 18 states is expected to grow by 7-9% to Rs 7.2 lakh crore, according to Crisil Ratings. This follows a 27% increase in 2023-24, reaching Rs 6.7 lakh crore. Key growth areas include transport, water supply, and sanitation, while irrigation will see modest growth. These states account for 94% of India’s state capital outlays, with spending as a percentage of GSDP projected at 2.4%, consistent with last year but higher than previous years.
Crisil Ratings notes that higher GST collections, states’ shares in central taxes, and interest-free loans from Delhi will support these outlays. The Centre has increased interest-free capex loans to Rs 1.5 lakh crore this year, up from Rs 1.3 lakh crore last year. Anuj Sethi, Senior Director at CRISIL Ratings, stated that states are expected to achieve about 90% of their budgeted targets, higher than the 82-84% levels seen between 2018 and 2023.
Doubts Revealed
Capital Spending -: Capital spending refers to the money that states spend on building things like roads, schools, and hospitals. It’s like when you save up to buy a new bicycle or a toy that will last a long time.
Rs 7.2 lakh crore -: Rs 7.2 lakh crore is a way to say 7.2 trillion rupees. In India, ‘lakh’ means 100,000 and ‘crore’ means 10 million. So, it’s a very big amount of money that the states plan to spend.
GSDP -: GSDP stands for Gross State Domestic Product. It’s like a report card for a state’s economy, showing how much money the state makes in a year from all its activities.
Crisil Ratings -: Crisil Ratings is a company that checks how well states and companies are doing financially. They give ratings to help people understand if it’s safe to lend money to them or invest in them.
GST collections -: GST stands for Goods and Services Tax. It’s a tax that people pay when they buy things. The government collects this money to use for public services and development.
Central tax shares -: Central tax shares are the portion of taxes collected by the central government that is given to the states. This helps states have more money to spend on their needs.
Interest-free loans -: Interest-free loans are loans that you don’t have to pay extra money on, called interest. It’s like borrowing money from a friend who doesn’t ask for anything extra in return.
Anuj Sethi -: Anuj Sethi is a person who works at CRISIL. He helps analyze and predict how well states are managing their money and spending.