The government has hinted at the possibility of reducing capital expenditure. Government sources have disclosed that states have been advised to make full use of their unspent funds before requesting additional financial support.

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The primary message from the central government is one of fiscal responsibility. Presently, states are being urged to diligently assess and utilise their idle funds, ensuring that all unspent funds are exhausted before seeking further financial assistance from the central government.

Additionally, the government is working to address its debt levels, aiming to reduce overall expenditure as a long-term goal. This approach aligns with the Finance Minister's statement that fiscal profligacy should be avoided to prevent leaving a burdensome debt for future generations. However, the government's options for achieving this goal are limited, primarily involving adjustments to expenditure at some point.

Thirdly, it is important to acknowledge that the central government may not be able to maintain the high rate of capital expenditure witnessed in the last two years. For instance, the direct central government capital expenditure was around six lakh crore in FY22, but the budget allocates 10 lakh crore for this purpose. The actual figures will depend on the revised estimates (RE).

The central government is now indicating that sustaining such elevated levels of capital expenditure may not be feasible, thereby emphasising the need for private sector participation.

Lastly, regarding the current financial year, the government anticipates staying within the food subsidy budget. There may be some additional allocation for The Mahatma Gandhi National Rural Employment Guarantee Act 2005 (MGNREGA), but this will be done within the established fiscal limits. The central government remains committed to its fiscal deficit target of 5.9% for this financial year.

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First Published:Oct 23, 2023 5:51 PM IST