‘Rural roads sector may continue driving plan expenditure’

October 10, 2013

By PTI |

MUMBAI: Rural roads sector is likely to continue driving the planned expenditure of the Centre this fiscal, which in the first five months rose 23 per cent, and may help revive the the economy, says a report.

According to a Deutsche Bank report, during April-August, the plan expenditure of the Centre was up 23 per cent compared with the year-ago period, primarily driven by the spending on rural roads.

“Growth in planned expenditure will be driven by the ministry of roads (rural roads) as well as by spending on irrigation and water under the social expenditure schemes, which suggests pre-election demand,” the report said.

According to the report, in August, on year-on-year basis, cement demand grew 6-8 per cent and coal supplies to power plants rose 17 per cent, driving power generation volume growth of 15 per cent.

“Within planned expenditure the jump is high in rural spends, suggesting pre-election demand. However, the spurt in housing credit, along with a good spend in overall infra suggests that there is all-round growth. We may expect recovery on rising government expenditure,” it said.

“We believe a big surge in planned government expenditure may be a key reason behind this. Although there is a feeling that going forward this may be curtailed to reduce the fiscal deficit, it is still debatable how much this could come down in a pre-election year,” the bank observed.

Source-http://economictimes.indiatimes.com