NEW DELHI: As pre-budget consultations got over on Monday, industry representatives and analysts want the government to continue its thrust on capital expenditure (capex), albeit with a shift in sectoral focus. The general view is that while the government must increase allocation to capex in the budget, it must spend more on creating social sector infrastructure liking housing, health and education.
A delegation of economists who had met the finance minister earlier in December had said the government must keep focus on capex but it needs to diversify the sectors for more positive results. “There is a limit to the benefits to be reaped from spending in roads, railways, and defence,” said one of the economists on condition of anonymity. The delegation has suggested the government spend more on sectors like affordable housing. Rumki Majumdar, economist with Deloitte, says focus should be on building physical, digital and social infrastructure.
“The government is expected to expand road networks, develop multi-modal logistics parks and improve logistical infra to support economic activity. At the same time, the government will focus on health and education, with a special focus on skilling,” she says.
As per her, recent success in driving path-breaking digital innovations will continue as the government focuses on frontier technologies to address social issues like inclusion, formalisation of economy and transparent governance. In last year’s budget, the government has allocated Rs 11.11 lakh crore for capex in FY25. The government has been slow in spending this amount. Till November, it had spent only Rs 5.13 lakh crore, 12% lower than it spent during the same period last year.
Industry body FICCI in its budget expectation has proposed that the government should raise capex in FY26 by 15%. In FY25, it has increased allocation by 11.11%. Given uncertainty amid persisting global headwinds, government’s thrust on public capex on physical, social and digital infrastructure will be important to maintain growth momentum, maintains FICCI in its Budget expectation.