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Finance minister Nirmala Sitharaman on Tuesday announced an increase in the capital expenditure for FY23 by a sharp 35.4% to a record 7.50 lakh crore from 5.54 lakh crore in FY22. 

Presenting the Union Budget for 2022-23, Sitharaman said the capex was 2.2 times of the amount spent during the pre-pandemic levels (2019-20).

“The capex for FY23 will be 2.9% of the GDP. Effective capex of the central govt is estimated at 10.68 lakh crore which will be 4.1% of the GDP," Sitharaman announced.

Mint had earlier reported that the government was due to announce a sharp increase in capex to support growth and employment in the economy.

Sitharaman had earlier increased capex by a record 26% to 5.54 trillion in FY22, when compared with revised estimates of 4.39 trillion in covid-hit fiscal 2021.

The 35% increase in capex over FY22 has more than doubled the pre-pandemic budgeted capex of 3.4 trillion in FY20. The total capex from the budget stood at 3.16 trillion in FY19.

Government spending has shifted towards capital expenditure for the past few years as such spending helps push growth and jobs, and has a multiplier effect on the economy.

"Increase in capital expenditure by the central and state governments by one rupee each crowds in private investment, induces a more than proportionate increase in investment in the economy with benefits accruing over a few years," RBI had said in a note.

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