Thursday, May 23, 2024
Advertisement
  1. You Are At:
  2. News
  3. Business
  4. Budget 2024: Government likely to maintain momentum on increasing capital expenditure

Budget 2024: Government likely to maintain momentum on increasing capital expenditure

The government has allocated a record-high provision of Rs 10 lakh crore for capital expenditure in FY24, a significant increase from Rs 4.39 lakh crore in FY21.

Edited By: Akshit Tyagi New Delhi Published on: January 21, 2024 15:44 IST
Finance Minister Nirmala Sitharaman
Image Source : PTI (FILE) Finance Minister Nirmala Sitharaman

The government is expected to maintain its focus on increasing capital expenditure in the upcoming budget, particularly in the infrastructure sector, to stimulate economic growth amid subdued private investment. Since the post-COVID period, the budget has consistently emphasised capital expenditure, leading to over 7 per cent growth in the last three years, making India the fastest-growing large economy globally.

In the current fiscal year, the government has allocated a record-high provision of Rs 10 lakh crore for capital expenditure. This marks a significant increase from Rs 4.39 lakh crore in 2020-21, reaching Rs 7.5 lakh crore in 2022-23, and further surging to Rs 10 lakh crore, a growth of 37.40 per cent.

For the upcoming fiscal year, it is anticipated that the government will continue prioritizing capital expenditure, potentially earmarking a substantial amount for such investments. Capital expenditure is viewed as having a multiplier effect on the economy and serves to attract private investment.

Icra, in its pre-Budget expectations, estimates the government will budget for a capital expenditure of Rs 10.2 lakh crore in FY25, reflecting a relatively moderate year-on-year expansion of about 10 per cent, compared to the more significant expansions observed in the post-COVID years.

While capital expenditure saw a 31 per cent increase to Rs 5.9 lakh crore in April-November of the current fiscal, there has been a recent contraction in October 2023 and only a marginal rise in November 2023. The monthly average has been lower than required to meet the budgeted target of Rs 10 lakh crore.

Given India's substantial infrastructure deficit, the government's emphasis on capital spending plays a crucial role in attracting private investment. Private investment has shown signs of improvement in sectors like steel, cement, and petroleum as the economy experiences growth.

According to Seshadri Sen, Head of Research at Emkay Global Financial Services, government-led capital expenditure is expected to continue at an accelerated pace, contributing to unlocking a virtuous cycle of investment, productivity growth, job creation, and increased demand and exports.

(With PTI inputs)

READ MORE: India’s goods, services exports edge higher by 0.40 per cent in 2023 amid global economic uncertainties

READ MORE: Stock markets to be guided by quarterly earnings, global trends in holiday-shortened week, say analysts

Advertisement

Read all the Breaking News Live on indiatvnews.com and Get Latest English News & Updates from Business

Advertisement
Advertisement
Advertisement
Advertisement