'Cut, No Cut': Sitharaman Gets Into 'Arithmetic' War With Chidambaram Over Capital Expenditure

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Last Updated:April 01, 2025, 21:25 IST

Senior Congress leader P Chidambaram questioned why the Centre has denied a reduction in the capital expenditure, to which Union finance minister Nirmala Sitharaman said his claims are "misleading" and "based on flawed comparisons"

Soon after giving her reply during the Question Hour in the Rajya Sabha to senior Congress leader P Chidambaram (R), FM Nirmala Sitharaman got into a mild back-and-forth with him on social media. (Image: PTI/File)

Union finance minister Nirmala Sitharaman on Tuesday said the capital expenditure has not been cut, but has gone up to Rs 11.21 lakh crore for 2025-26 fiscal, and there has been proportional increase in loans given to states for capital expenditure for the same year.

But, soon after giving her reply during the Question Hour in the Rajya Sabha to former finance minister P Chidambaram, she got into a mild back-and-forth with him on social media. While she said there is no cut in the capital expenditure from the previous fiscal, he claimed the opposite.

Writing a lengthy post on X, Chidambaram questioned why the central government has denied a reduction, or cut, in the capital expenditure for the FY 2024-25. He said: “It is simple arithmetic that the government has cut Rs 92,682 crore and Rs 90,887 crore, respectively, under the two heads (budget estimates and revised estimates). I asked the reasons for the cut. The Hon’ble FM denied there was any cut! I am speechless."

Why did the Government deny that there was a reduction (cut) in the Capital Expenditure in 2024-25?According to the Budget documents, the BE and RE figures of capital expenditure in 2024-25 are as follows:
Central governmentcapital expenditure:BE: Rs 11,11,111 croreRE: Rs…
— P. Chidambaram (@PChidambaram_IN) April 1, 2025

Sitharaman hit back saying his “selective arithmetic" and “flawed comparisons" may serve political rhetoric, but would not be helpful when it comes to “informed public discourse". She took a swipe at his tenure, saying the current government’s fiscal prudence may be “unfamiliar from his days in office".

The former Finance Minister @PChidambaram_IN’s claims of a ‘cut’ in capital expenditure are misleading and based on flawed comparisons. Budget Estimates (BE) are prepared before the financial year begins and naturally evolve into Revised Estimates (RE) based on expenditure…
— Nirmala Sitharaman (@nsitharaman) April 1, 2025

“The former Finance Minister P Chidambaram’s claims of a ‘cut’ in capital expenditure are misleading and based on flawed comparisons… The Government’s fiscal prudence stands firm, reflective of ground realities and transparent fiscal management, something perhaps unfamiliar to Shri P Chidambaram from his days in office," she wrote in a detailed post on X.

She said budget estimates (BE) are prepared before the financial year begins and naturally evolve into revised estimates (RE) based on expenditure trends, implementation capacity, and emerging priorities. “In FY 2024-25, capital expenditure was influenced by several factors: the Model Code of Conduct during General Elections, extreme weather events, and lower-than-expected spending by states and certain central agencies. Additionally, many states failed to submit utilization certificates, making further fund releases imprudent. Clearly, the revisions were not due to fiscal constraints," she wrote.

The finance minister said a year-on-year comparison shows clearly that the capex numbers have risen from BE (2023-24) at Rs 10.01 lakh crore to BE (2024-25) at 11.11 lakh crore. The BE (2025-26) for capex stands at Rs 11.21 lakh crores, which is higher than the one in 2024-25, she said.

“Similarly, the RE (23-24) was estimated at Rs 9.50 lakh crore and the RE (24-25) is estimated at Rs 10.18 lakh crore. This clearly indicates an increase of 7.3%. There has been no cut in the capex of the central government. Since 2021, outlays for Capex by the Central Govt have increased exponentially," she wrote.

According to her, capex outlays (BE) since FY 2020-21 are:

FY 2021: Rs 4.12 lakh crore

FY 2022: Rs 5.54 lakh crore

FY 2023: Rs 7.50 lakh crore

FY 2024: Rs 10 lakh crore

FY 2025: Rs 11.11 lakh crore

FY 2026: Rs 11.2 lakh crore

The Union Budget defines capital expenditure, or capex, as funds allocated and used by the government to develop assets that contribute to economic growth. This includes investments in infrastructure, machinery, healthcare, education, and other essential sectors.

WHAT DID FM SITHARAMAN SAY IN RAJYA SABHA?

Sitharaman said the capital expenditure was at Rs 11.11 lakh crore in 2024-25. “Actually, (in) the budget this year…it has gone up to Rs 11.21 lakh crore. So, the capital expenditure has not been cut at all," she said.

She said loans to states under the scheme for interest-free 50-year special assistance for capital expenditure has gone up proportionately. “So, cutting down the capital expenditure is not the case with us," she added.

Chidambaram sought to know the reason for reduction in the capital expenditure for FY25 in the revised budget estimate to Rs 10,18,429 crore from Rs 11.11 lakh crore. Similarly, he pointed out that the special assistance to states was reduced to Rs 2,99,891 crore in the revised budget estimate from Rs 3,90,778 crore for FY25.

Replying to a supplementary on whether the Centre monitors if states are using the funds for capital expenditure or any other things, Sitharaman said: “Not that instant when the money is sent, I would not know whether it is used for capital expenditure."