NEW DELHI: Finance Minister Nirmala Sitharaman, in the Interim Budget 2024, has proposed to raise capital expenditure—for the fourth straight year—by 11.1% to Rs 11.11 lakh crore. Infrastructure spending in the financial year 2024–25 is projected at 3.4% of gross domestic product (GDP).
“Building on the massive tripling of the capital expenditure outlay in the past four years, resulting in a huge multiplier impact on economic growth and employment creation, the outlay for the next year is being increased by 11.1 percent to eleven lakh, eleven thousand, one hundred and eleven crore rupees (11,1,111 crore). This would be 3.4 percent of the GDP,” said Sitharaman in her budget speech.
Among key allocations, the ministry of road transport and highways is allocated Rs 2.78 lakh crore, while the ministry of railways will be getting Rs 2.55 lakh crore.
The budget proposed that three major economic railway corridor programmes will be implemented. These are energy, mineral, and cement corridors, port connectivity corridors, and high-traffic density corridors. The budget has also proposed that 40,000 normal rail bogies will be converted to Vande Bharat standards.
Sitharam said that the expansion of existing airports and the development of new airports will continue expeditiously. She added that Metro Rail and NaMo Bharat can be the catalyst for the required urban transformation, and the expansion of these systems will be supported in large cities focusing on transit-oriented development. The FM also emphasised green energy projects and the development of tourist centres.
Further, Sitharaman said the 50-year interest-free loan of Rs 1.3 lakh crore would continue to be available for states in FY25, as well as for their infrastructure and capex spends.
India's capex for FY24 was kept at Rs 10 lakh crore but later revised to Rs 9.5 lakh crore, a sharp jump from Rs 7.3 lakh crore in FY23. In FY21 and FY22, the capex stood at Rs 4.1 lakh crore and Rs 5.9 lakh crore, respectively. Capex, or capital expenditure, means spending on infrastructure such as roads, ports, railways, and airports.
Aditi Nayar, Chief Economist, Head, Research & Outreach, ICRA, said, “The higher than expected capex (FY24: Rs. 9.5 trillion vs. Rs. 9.3 trillion and FY25: Rs. 11.1 trillion vs. 10.2 trillion) and lower than projected fiscal deficit (FY24: 5.8% vs. 6.0% and FY25: 5.1% vs. 5.3%) suggest that the quality of expenditure is going to be healthier than what we had pencilled in both in FY2024 and FY2025."