Centre’s capex momentum continues, states still not firing: Report

Centre and states are showing different growth parameters for capex spending in current fiscal year, according to an industry report on infrastructure.While the Centre has maintained its strong capex momentum registering a growth of 63% in the April-November period of current fiscal, states’ capex growth has remained relatively slower at just 4% YoY, according to report on engineering and capital goods sector (comprising a big chunk of infrastructure sector) by Emkay Global Financial ServicesCentre’s capex momentum can be seen also from 24% growth registered on four-year CAGR basis.A large part of the Centre’s capex growth has come from railways and road sector. Capex for Railways and Roads has grown by 77% and 100% YoY, respectively. Overall, 60% (46% last year over the same period) of the budgeted capex has been carried out in the first eight months of FY23, the brokerage report said.In comparison, states have spent 37% of their budgeted capex till Nov-22 as against 45% YoY. Capex by states in general was lopsided towards the end of the fiscal; hence, there is a similar expectation this fiscal too, the report said.Notably, if one were to consider a ₹1 trillion transfer to states not as part of the Central capex, the combined Central and State capex would have no growth for the rest of the year, the Emkay Global report said.In terms of ordering by the sector, after a slow ordering during October-November, the sector has managed to end 3QFY23 with a decent 20% YoY growth and 14% 4-yr CAGR in ordering.Importantly, poor awarding in the roads sector continued in 3QFY23 as well. Power (both, generation and T&D sub segments), water supply,irrigation and railways remained the key sectors of growth, said the report.As per the report, growth in credit to industries at 15% YoY and that to infra at 11% held promise that the sector remains healthy with potential for further invests and growth. Credit to industries has steadily increased in FY22, after trending flat for a few years. Credit to industries and infrastructure has grown by 15% YoY and 11% YoY, respectively till Nov-22, said the report.Industry growth ex Infra growth stands at 18% YoY. There has been good growth in chemicals,iron & steel and petroleum and coal products. Credit to industries, as a percentage of overall non-food credit, still remains extremely low, at 26%, the brokerage report said.