Housing, roads among biggest capex gainers in FY22, PMAY urban lags

Capital infrastructure has been at the forefront of the Centre’s revival plan for the Indian economy ever since it saw a record contraction in the first quarter of FY21.  The capital expenditure (capex) Budget estimate (BE) for FY23 has been kept at Rs 7.5 trillion, out of which Rs 1 trillion will go to states as long-term, interest-free loans for their capex needs.

This figure (Rs 7.5 trillion) is 24.4 per cent over the FY22 revised estimate of Rs 6.03 trillion, and 76 per cent over the FY21 outlay of Rs 4.26 trillion. In absolute terms, the Centre’s capex Budget has increased by Rs 3.24 trillion in just two years.

A deeper look at the data available on the website of Controller General of Accounts shows that the key infrastructure departments were the focus of the Centre’s capex plans, when one compares FY22 with FY21.

Some ministries like petroleum and natural gas and have not been considered for this analysis (see table) as their capex outlay is minimal, and most of the capex on high multiplier infra projects in these sectors comes from state-owned companies like Indian Oil, ONGC, NTPC and others who raise resources through the markets and do not depend on government allocations as much.

The biggest gainer in FY22 has been the Ministry of Housing and Urban Affairs. Its capex outlay jumped 152 per cent to Rs 25,946 crore. This was primarily on back of the housing push due to the PM Awas Yojana (urban). While the scheme slowed down in FY21 due to the pandemic, construction activity has picked up again.

However, out of the many schemes started by the Centre, PMAY urban remains a laggard. Finance Minister Nirmala Sitharaman had allocated Rs 48,000 crore to PMAY (urban and rural) for FY23. The government then extended the deadline for the rural part of the scheme by two more years, and may do the same for urban.

A recent analysis by Business Standard shows that only 48.7 per cent of houses had been completed until May 17. The government had set a target to finish the construction of sanctioned houses by March 31, 2022. As against a target of 12.1 million houses, it constructed and delivered 5.9 million houses since the scheme was announced in June 2015. Data from the PMAY portal shows that house completion has averaged less than 2 million per year.

Another big year-on-year jump in capex, surprisingly, has been in the Department of Space, whose FY22 allocation rose by 49 per cent to Rs 6,902 crore.

The two big infra ministries, Road Transport and Highways and Railways, saw their capex allocation rise by 29.6 per cent and 7.3 per cent respectively. The Road Ministry in FY22 had set a 40-km per day construction goal but later revised it to 32 km per day at 12,000 km for the full fiscal.

For FY23, Union Minister Nitin Gadkari had said the National Highways Authority of India aims to construct a record 18,000 km of highways at a pace of 50 km per day.  The FY23 target is 33 per cent higher than FY22.

The government reportedly constructed 10,457 km of national highways in 2021-22, which was 24 per cent less than the previous fiscal. The capex for Railways has mostly been spent on electrification, track doubling, the two dedicated freight corridors and station redevelopment.

This year, even as the Centre has been forced to increase fertilizer and food subsidies, and take a Rs 85,000-crore revenue hit due to cutting excise duties in petrol and diesel, top policymakers including Sitharaman, have been categorical in saying that the Rs 7.5 trillion capex target will not be compromised with.