Centre’s capital expenditure cut logistics cost for businesses: FM Sitharaman

  • Union government has allocated 43.5 trillion for building infrastructure over the last 10 years

Gireesh Chandra Prasad
First Published15 May 2024
Union finance minister Nirmala Sitharaman. (REUTERS)
Union finance minister Nirmala Sitharaman. (REUTERS)

New Delhi: The Union government has allocated 43.5 trillion for building infrastructure in the last 10 years, which boosted the economy through a multiplier effect, while lowering logistics cost for businesses, finance minister Nirmala Sitharaman said on Wednesday. 

The minister said in a social media post that better road connectivity attracts investments and boosts local businesses by improving market access and reducing logistics costs. 

Infrastructure spend

“Due to better roads, there is a significant potential savings of 2.4 trillion to 4.8 trillion annually in logistics costs,” the minister said. 

Sitharaman said the gross budgetary support allocated for capital expenditure since 2014 is a 3.72-fold increase compared to that of the period from 2004 to 2014. The minister’s comments about the government’s strategy of scaling up infrastructure expenditure comes in the wake of both the ruling Bharatiya Janata Party and the opposition Congress party highlighting the economic and fiscal performance of their terms in office, during the ongoing national elections. 

Also Read: Infrastructure, capital goods yet to gain policy momentum

“Spending on infrastructure not only boosts gross domestic product (GDP) growth through its multiplier effects on consumption and investment but also improves the long-term efficiency of the economy by reducing logistical constraints,” the minister said in the post, quoting a study by the National Institute of Public Finance and Policy (NIPFP) which said 1 spent on capital expenditure in the country increases economic output by 4.80.

“Our government significantly increased the outlay for capex. As a proportion of total expenditure, capex rose to over 21% in 2023-24, compared to just 12% in 2013-14,” the minister said. Since 2014, the National Democratic Alliance (NDA) government has allocated 43.53 trillion in Gross Budgetary Support (GBS) capital expenditure, an increase of 3.72 times compared to 2004-14.

Opposition questions

Congress party leader and general secretary in-charge Communications Jairam Ramesh on Wednesday told a television channel that the ruling party was not discussing unemployment, inflation and development. The NDA government has been focused on scaled up expenditure on infrastructure in order to crowd in private investments and policy makers expect that with improved balance sheets of companies and banks, private sector investments will take off. Both the BJP and the Congress have focused on economy and manufacturing sectors in their manifesto, promising to make the country a production hub for the world. 

Sitharaman said that the upcoming Delhi-Mumbai Expressway will cut travel time between the two cities to 12 hours from 24 hours and the Zojila tunnel reduced travel time to just 15 minutes from 3.5 hours offering all-weather connectivity between Srinagar, Kargil, and Leh. The minister also said that Indian Railways has ushered in an era of modernization with modern stations, trains, facilities and technology. 

Also Read | ‘The national elections haven’t slowed down the Centre's capex plan in Q1'

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