Presenting the Union Budget 2023-24, the finance minister proposed to increase capital investment outlay for the third year in a row, by 33% to ₹ 10 lakh crore, which would be 3.3% of GDP and almost three times the outlay in FY 2019-20.
While proposing the increase, envisioning capital investment as the driver of growth and jobs, Sitharaman, said “This substantial increase in recent years is central to the government’s efforts to enhance growth potential and job creation, crowd-in private investments, and provide a cushion against global headwinds.”
To attract more private investment in sectors predominantly dependent on public resources after the subdued period of the pandemic, she stated that, “the newly-established Infrastructure Finance Secretariat will assist all stakeholders for more private investment in infrastructure sectors like railways, roads, urban infrastructure and power.”
Previously, state governments had been asking the centre to extend the interest free CAPEX loan. The finance minister, keeping it in mind, proposed to continue the 50-year interest free loan to state Governments for one more year. Centre had introduced this CAPEX scheme for the states in FY 2022-23. This extension will spur investment in infrastructure while also incentivising states for complementary policy actions. The outlay in this regard being enhanced significantly to ₹1.3 lakh crore. This represents an increase of 30 per cent over BE 2022-23 allocation and accounts to nearly 0.4 per cent of GDP of FY 2023-24.
Sitharaman added that the direct capital investment by the centre is complemented by the provision for creating capital assets through Grants-in-Aid to states. She said that this “Effective Capital Expenditure” of the Centre would be budgeted at ₹ 13.7 lakh crore, i.e., 4.5% of GDP.
The key infrastructure and strategic ministries such as Road Transport and Highways, Railways, Defence, etc, will lead in driving the CAPEX in FY 2023-24. According to the fiscal policy, it magnifies government’s thrust on infrastructure development through enhanced capital expenditure. This is in line with the government’s focus and commitment to Four I’s – Infrastructure, Investment, Innovation and Inclusion in the next 25 years.
