India’s FY25 capital spending seen 5% below target, top ministry official says

NEW DELHI (Reuters) -India might undershoot its capex target of 11.1 trillion rupees ($131.72 billion) for fiscal year 2024-25 by around 5%, a top finance ministry official said on Wednesday.

The Indian government’s infrastructure spending, critical to one of the world’s fastest economic growth rates, has been slow in the current year due to national elections.

“Even last year, it (capital expenditure) was budgeted at 10 (trillion rupees), and expenditure was about 95%. I see even this year we should be around the same percentage,” economic affairs secretary Ajay Seth said at an event in New Delhi.

Between April and September, the government spent just over 37% of its budgeted target of 11.1 trillion rupees for 2024-25, compared with 49% of the previous year’s target, according to government figures.

Some goods and services may not have grown at the same pace as last year in the July-September quarter, but the government sees no downside risks to its growth projection of 6.5%-7% for fiscal year 2024-25, Seth said.

Food prices are a problem area but, other than that, inflation poses no challenge, Seth said.

Retail inflation in India soared to its highest level in 14 months in October, partly due to high prices of edible oils, onions and tomatoes.