Capital Spending in India: Bridging the Data Gaps
DOI:
https://doi.org/10.55763/ippr.2025.06.02.001Abstract
Building on our previous analyses of off-budget borrowing and subsidy spending, this paper extends the methodologies developed in earlier papers to critically examine capital expenditure (capex) reporting practices in India. Capex plays a pivotal role in economic development and fiscal policy, involving investments in durable assets that enhance productivity, generate employment, and foster private-sector participation. While the reported capex has risen significantly in recent years, a deeper examination reveals inconsistencies, data gaps, and misclassifications that undermine the accuracy, accountability, and effectiveness of these estimates. India’s current reporting practices often obscure the true nature and impact of these investments. Significant portions of the reported capex are allocated to loans and advances to state governments, public sector enterprises, and debt repayment rather than direct asset creation. The paper compares India’s reporting practices with international standards, emphasising the need for accrual accounting, comprehensive reporting, and eliminating misclassification of capex. It proposes adjusted capital spending estimates that align with the global standards and the reforms required to improve transparency and accountability practices in India.
Keywords:
Capital Spending, Fiscal Transparency, Data Gaps, Government Finance Statistics, Public Finance ManagementDownloads
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