Capex raised to ₹10 tn as govt pushes for infra, jobs
1 min read . Updated: 02 Feb 2023, 12:14 AM IST
PremiumCapital spending by the government has been on the rise for the past few years even as private investment remained tepid during the pandemic.
NEW DELHI : The government proposed a record ₹10 trillion in capital expenditure for the next fiscal year as it continued its push for more roads, ports and other critical infrastructure on the back of a steep hike it said was set to create more jobs and propel economic growth.
Finance minister Nirmala Sitharaman said the planned capex was 33% more than the ₹7.5 trillion this fiscal.
“Capital investment outlay is being increased steeply for the third year in a row by 33% to ₹10 trillion, 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 on Wednesday.
“The year-on-year increase of 33% is only marginally lower than last year’s 35% jump. The ratio of capex-to-GDP, which rose to 2.7% in 2022/23, is estimated at 3.3% in the new financial year," she added.
Mint reported in November that the budget would raise the Centre’s capex to ₹10 trillion to build critical infrastructure.
Capital spending by the government has been on the rise for the past few years even as private investment remained tepid during the pandemic.
Although private investment gathered some momentum in the fiscal first half, a fact highlighted by the Economic Survey 2022-23 on Tuesday, a host of economists suggested hiking government capital spending to help steer the economy through any turbulence, including a feared global recession in 2023.
Sitharaman said 100 critical transport infrastructure projects have been identified for last- and first-mile connectivity for ports, coal, steel, fertilizer and foodgrains sectors.
“They will be taken up on priority with an investment of ₹75,000 crore, including ₹15,000 crore from private sources,“ she said.
Finance minister Sitharaman also noted that investments in infrastructure have a large multiplier impact on growth and employment.
Sitharaman had increased capex by a record 35.4% to ₹7.5 trillion in FY23 after it grew 26% to ₹5.54 trillion in covid-hit FY 2022.
Before that capex in the revised estimates for FY21 stood at ₹4.39 trillion in the first year of the pandemic in FY21.
The current capex of ₹10 trillion is three times the pre-covid levels of FY 2020.
