Budget 2024: Expenditure likely to be balanced between revex and capex

Expenditure Pattern: A few days away from the Budget 2024, everyone is trying to find an answer to a difficult question. How the government will spend in the upcoming poll-bound year? How it will strike a balance between capital outlay and revenue expenditure? In a pre-budget note, Emkay Global Financial Services tried to find the answer to this question, and said, “ The capex/revex ratio is likely to improve to 29 per cent from 26.5 per cent in FY24E, despite this being an election year."

Capital Expenditure 

The pre-budget document also said that assuming a modest overall expenditure growth at 5 per cent in FY25E (revex and capex growth at 3.5 per cent and 12 per cent, respectively, after the 3 per cent and robust 30 per cent in FY24E). 

“The scope of going outright populist seems bleak. In our view, amid the moderating tax revenue growth and high committed revenue expenditure and market borrowings,” the Emkay report added. 

Revenue Expenditure

The pre-budget memorandum also stated that while within Revex, prioritizing welfare spending toward rural sectors and MSMEs will continue, the revex/GDP is likely to be lower at 11.2 per cent – reverting to the pre-Covid period ratio, after having seen a sharp rise post-Covid to around 14.6 per cent and of 12 per cent in FY24E.