On Tuesday, Finance Minister Nirmala Sitharaman reaffirmed India’s capital expenditure (capex) allocation for fiscal year 2025 at an ambitious Rs 11.11 lakh crore, maintaining the figure set in the Interim Budget earlier this year.
This figure represents a notable increase from the revised estimate of Rs 9.5 lakh crore for the previous year.
The Finance Minister highlighted that the government will allocate 3.4% of the total Budget to capex, up from 3.2% last year and nearly double the expenditure percentage from five years ago.
This move underscores the government’s commitment to significant investment in infrastructure and development despite the prevailing economic uncertainties.
For the fiscal year 2024, capital expenditure reached Rs 9.5 lakh crore, marking a substantial 28.2% increase from the previous year and representing 2.8 times the expenditure level of FY20.
This growth reflects a concerted effort to boost economic activity and infrastructure development.
Private sector capital expenditure has also shown improvement in the financial year ending in March, as reported by the Economic Survey.
The rising Gross Fixed Capital Formation (GFCF) highlights its growing role as a key driver of economic expansion, contributing increasingly to the nominal GDP.
The government’s emphasis on capex has played a pivotal role in driving economic growth amid a challenging global environment.
The strategy not only focuses on broad-based infrastructure development but also aims to stimulate private investment, creating a positive feedback loop for the economy.
This strategic investment approach is seen as crucial for sustaining growth and resilience in the face of global economic uncertainties.
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