Sitharaman: No capital expenditure cut; claims of capex reduction misleading, flawed

New Delhi, Apr 1 (PTI) Finance Minister Nirmala Sitharaman on Tuesday said the capital expenditure has not been reduced but has gone up to Rs 11.21 lakh crore for the 2025-26 fiscal, and claims of cuts are misleading and based on flawed comparisons.

Replying during the Question Hour in the Rajya Sabha, Sitharaman said the capital expenditure was Rs 11.11 lakh crore in 2024-25.

"Actually, (in) the budget this year..., it has gone up to Rs 11.21 lakh crore. So, the capital expenditure has not been cut at all," she said.

Loans to states under the scheme for interest-free 50-year special assistance for capital expenditure have gone up proportionately.

"So, cutting down the capital expenditure is not the case with us," she added.

Sitharaman was responding to a question by senior Congress leader and former finance minister P Chidambaram.

Later responding to a social media post of Chidambaram, Sitharaman said his "claims of a cut in capital expenditure are misleading and based on flawed comparisons".

Chidambaram's selective arithmetic and flawed comparisons between BE and RE of the same year may serve political rhetoric but do little for informed public discourse, she said in a post on X.

The government's fiscal prudence stands firm, reflective of ground realities and transparent fiscal management, something perhaps unfamiliar to Chidambaram from his days in office, she added.

She also clarified that capital expenditure was influenced by several factors: the Model Code of Conduct during General Elections, extreme weather events, and lower-than-expected spending by states and certain central agencies.

With regard to the Scheme for Special Assistance to States for Capital Investment (SASCI), she said it may be noted that the Budget Estimates for SASCI of 24-25 was 1.50 lakh crore, the Revised Estimate (as of 1 February 2025) was 1.25 lakh crores.

"I have mentioned in the House that the actual releases for SASCI (as of 26 March 2025) in FY24-25 is Rs 1,46,362 crore. This is an increase over RE24-25, what is there to be speechless?" she wondered.

Chidambaram in his social media post said that it is simple arithmetic that the government has cut Rs 92,682 crore (Capex BE over RE) and Rs 90,887 crore (SASCI BE over RE) for FY25.

"I asked the reasons for the cut. The Hon'ble FM denied there was any cut! I am speechless," he quipped.

Earlier in the Rajya Sabha, Chidambaram sought to know the reason for the reduction in the capital expenditure for FY25 in the revised budget estimate to Rs 10,18,429 crore from Rs 11.11 lakh crore. Similarly, he pointed out that the special assistance to states was reduced to Rs 2,99,891 crore in the revised budget estimate from Rs 3,90,778 crore for FY25.

The finance minister further said there has been an increase in the release of loans to states since the introduction of the scheme for interest-free 50-year special assistance for capital expenditure in 2020-21.

For 2020-21, a special assistance of Rs 9,912 crore was approved to states, but the actual release was Rs 11,830 crore.

Similarly, in 2021-22, Rs 15,928 crore was approved but released Rs 14,186 crore. In 2022-23, Rs 95,147 crore was approved and released Rs 81,195 crore. In 2023-24, Rs 1,27,492 crore approved and released Rs 1,00,954 crore.

In 2024-25, Rs 1,53,673 crore was approved, and up to March 26 about Rs 1,46,362 crore was released to states, she added.

Replying to a supplementary on whether the Centre monitors if states are using the funds for capital expenditure or any other things, she said: "Not that instant when the money is sent, I would not know whether it is used for capital expenditure".

Gradually with time lag, various digital ways in which today money is put in specific nodal accounts for expenditure, the Centre comes to know, she said.

Tamil Nadu did not withdraw anything when the scheme was introduced in 2020-21.

In 2021-22, Rs 505.50 crore was given, while in 2022-23, Rs 4,011 crore was given. In 2023-24, Rs 5,326.42 crore was sent and up to March 26 of the 2024-25 fiscal year, Rs 7,345 crore was given. Cumulatively, Rs 17,189.05 crore has been sent to Tamil Nadu.

The Tamil Nadu government has not taken assistance for two initiatives. One is the scrapping of old vehicles and the other is urban planning reforms.

"After completion of the projects, the utilisation certificate comes to us. Only then, we get to understand whether the money is used for capital expenditure or any other purposes," she added. PTI