Finance Minister Nirmala Sitharaman on Thursday made a modest increase of 11 per cent in capital expenditure (capex) to Rs 11.11 lakh crore for the next financial year as private investment picks up.
The government had hiked capex by 37.5 per cent to Rs 10 lakh crore for the current fiscal.
Against this, the government expects to spend Rs 9.5 lakh crore in the financial year ending March 2024.
In the previous two years as well the government had to increase the capex for infrastructure development by over 30 per cent to do heavy lifting as private investment was muted.
"Now that the private investments are happening at scale, the lower borrowings by the central government will facilitate larger availability of credit for the private sector," she said while presenting the Interim Budget 2024-25.
With the growth in the economy, there has been a pick-up in private investment in recent times in some of the sectors like steel, cement and petroleum.
"Building on the massive tripling of the capital expenditure outlay in the past 4 years resulting in huge multiplier impact on economic growth and employment creation, the outlay for the next year is being increased by 11.1 per cent to Rs 11,11,111 crore. This would be 3.4 per cent of the GDP," she said.
Post-COVID-19, the Budget has been laying special emphasis on capex. It has kick-started a dormant cycle for the economy.
As a result, India has witnessed over 7 per cent growth in the last three years, the highest among the large economies of the world.
During 2020-21, the government earmarked Rs 4.39 lakh crore which increased by 35 per cent to Rs 5.54 lakh crore in the subsequent year.
Another 35 per cent hike in capex was done in 2022-23 to Rs 7.5 lakh crore which subsequently reached a high of Rs 10 lakh crore, an increase of 37.4 per cent.
