NEW DELHI: Presenting the last full Budget before the general elections of 2024, Finance Minister Nirmala Sitharaman raised the capital expenditure (capex) by a big 33% to Rs 10 lakh crore for the financial year 2023-24. The rise in capex is significantly aimed towards creating additional jobs as the PM Narendra Modi-led government often faces criticism over growing unemployment.
“Capital investment outlay is being increased steeply for the third year in a row by 33% to Rs 10 lakh crore, which would be 3.3% of GDP. This will be almost three times the outlay in 2019-20. This substantial increase in recent years is central to the government’s efforts to enhance growth potential and job creation, crowd-in private investments, and provide a cushion against global headwinds,” Sitharaman said in her budget speech.
She added that effective capex will be Rs 13.7 lakh crore, forming 4.5% of GDP. The FM announced allocating Rs 2.4 lakh crore towards Indian Railways. These funds will primarily be spent on building tracks, new coaches and developing facilities at stations.
The Centre has allocated Rs 2.7 lakh crore towards the roads ministry. This is a 10% jump over the budgetary allocation of Rs 1.99 lakh crore made in the FY2022-23 budget. The government had set a target of 13,000 km of highway construction in FY2022-23, but is likely to miss the target by a decent margin. The government has also decided to continue the 50-year interest free loan to state governments for one more year, with a significantly enhanced outlay of Rs 1.3 lakh crore.
In addition, Sitharaman said that 100 critical transport infrastructure projects for last and first mile connectivity to ports, coal, steel, and fertiliser and food grain sectors have been identified. “They will be taken up on priority at an investment of Rs 75,000 crore. This includes Rs 15,000 crore from private sources,” she said.
Jaijit Bhattacharya, President, Centre for Digital Economy Policy Research, said that unprecedented budget allocation of Rs 10 lakh crore for capex will go a long way in supporting demand in the economy, especially for the construction industry where we were witnessing softening of demand. Rating agency Crisil said that the increased allocation this will fast-track implementation of high-multiplier government programmes such Bharatmala, Ghatishakthi, Parvatmala and Sagarmala.
‘Crucial for $5trillion economy’
The 33% increase in capital investment outlay using gross budgetary support, which has a strong growth this fiscal, and grants of Rs 3.7 lakh crore is crucial for infrastructure buildout needed to push India towards its $5 trillion econ-omy goal, said CRISIL.
Capital expenditure in 5 years
Since taking over in 2014, the BJP-led NDA government has ramped up capital spending on roads and energy, while placating investors through lower tax rates and labour reforms, and offering subsidies to poor households. In 2023, the government says it will raise its capital expenditure by 33% to Rs 10 trillion ($122.29 billion) in the next fiscal year. At $122bn, it marks a three-time increase over capital expenditure in 2019.
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