Kamal Ghorui
The government will continue with its planned capital expenditure of Rs 12.22 lakh crore in the current fiscal to sustain growth momentum despite rising fiscal stress linked to the ongoing Middle East conflict, a senior finance ministry official said on Friday, reported PTI.Expenditure Secretary V Vualnam said capital spending would remain a priority even as the economy faces multiple pressure points in the coming quarters.“The fiscal stress is indeed very much a reality, but at the same time… the capex would really be a priority item, which we would like to preserve and ensure that it continues at the budgeted level,” Vualnam said at the ICPP Growth Conference organised by Ashoka University.He said the next few months and the coming year may see “a lot of stress points”, with tax buoyancy also likely to come under pressure.Tax collections could be impacted after the government cut excise duties on petrol and diesel in late March to contain domestic fuel prices amid the crude oil surge.The excise duty reduction is estimated to cost the exchequer around Rs 7,000 crore for a 15-day period.Vualnam said highways, railways, shipping, ports and urban development would be the key focus sectors for FY27 capital expenditure.Referring to the global backdrop, he said uncertainties have created a “very challenging situation” for India, especially as the country remains a net importer of petroleum products.Since the start of the West Asia war on February 28, crude oil prices have jumped to a four-year high of $126 a barrel on Thursday from around $73 before the conflict began.India imports 60 per cent of its LPG requirement, and of that, 90 per cent passes through the now-closed Strait of Hormuz, he said.“It would be a very challenging situation,” the secretary added.He said the government has remained proactive and has responded to changing conditions with agility.India’s fiscal prudence has placed the country in a stronger position to manage current uncertainty, he said.“We will, on our part, be committed to see that the required funds are provided in spite of all the stress points that may come up,” Vualnam said.The FY27 Budget has pegged the fiscal deficit at 4.3 per cent of GDP, though it is now seen at 4.5 per cent after a downward revision in India’s nominal GDP under the new series.The Centre has also imposed an export duty of Rs 23 per litre on diesel and Rs 33 per litre on aviation turbine fuel to ensure adequate domestic supply. These duty revisions are being reviewed every fortnight.
