Home / Economy / Govt's capex grows 63.4% so far in FY23, 7.5 lakh cr target to be met: Economic Survey

The Central Government's capital expenditure (capex) has increased 63.4% during the April to November period of FY 2022-23. It was another growth driver of the Indian economy, crowding in the private capex since the January-March quarter of 2022, the Economic Survey 2022-23 said.

Capital expenditure has started pushing private investment and the Budget target of 7.5 lakh crore for the current financial year is likely to be met, the survey said.

On the current trend, it appears that the full year's capex (announced in the Budget) will be met, it said.

A sustained increase in the private capex is also imminent with the strengthening of the balance sheets of the corporates and the consequent increase in credit financing it has been able to generate, the survey noted.

A much-improved financial health of well-capitalised public sector banks has positioned them better to increase the credit supply. 

Consequently, the credit growth to the Micro, Small, and Medium Enterprises (MSME) sector has been remarkably high, over 30.6 per cent, on average during Jan-Nov 2022, supported by the extended Emergency Credit Linked Guarantee Scheme (ECLGS) of the Union government. 

The increase in the overall bank credit has also been influenced by the shift in borrower’s funding choices from volatile bond markets, where yields have increased, and external commercial borrowings, where interest and hedging costs have increased, towards banks.

If inflation declines in FY24 and if real cost of credit does not rise, then credit growth is likely to be brisk in FY24.

The Finance Minister raised capital expenditure (capex) by 35.4 per cent for the financial year 2022-23 to 7.5 lakh crore to continue the public investment-led recovery of the pandemic-battered economy. The capex in the previous year was pegged at 5.5 lakh crore.

The government laid emphasis on capital expenditure to push economic growth hit by the pandemic. It was expected that the increase in public spending would crowd in private investment.

Going by the capex multiplier estimated for India, the economic output of the country is set to increase by at least four times the amount of the capex, the survey stated.

State, in aggregate, are also performing well with their capex plans, it said, adding, like the Central government, states also have a larger capital Budget supported by the Centre's grant-in-aid for capital works and an interest-free loan repayable over 50 years.

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