Govt to widen capex scope from FY28 to include asset upgrades and tech spending
Ranen Banerjee, partner and leader, economic advisory, PwC India, said, “As per accounting practices in the private sector, when an asset is replaced or major
Ranen Banerjee, partner and leader, economic advisory, PwC India, said, “As per accounting practices in the private sector, when an asset is replaced or major overhaul is undertaken, such expenditure is capitalised and then depreciated over its life.
Given government accounts are on cash basis, expenditure is accounted only in the year it is spent and there is no provision of depreciation. Hence,
to reflect the true extent of capex being done, it is fair to include expenditure on major retrofitting, rehabilitation and significant upgrading of assets. Routine
operation and maintenance should, however, remain outside the capex basket, with clear guidelines to prevent overstatement.”
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