'A rupee spent on road will give a return of 2.5 times,' says Jayant Sinha; calls capex secret sauce for growth

Senior BJP leader Jayant Sinha on Monday said that capital expenditure is the secret sauce for growth. He added that investing in infrastructure like railways, airports, highways, metro lines will not only result in immediate growth but also yield productivity over the next couple of years.

The comment from the Lok Sabha MP comes amidst Centre's increased focus on capital expenditure. The Centre has earmarked Rs 10 lakh crore for capital expenditure, FM Sitharaman announced during her Union Budget 2023 speech. This is a 33 per cent jump over the previous financial year’s Rs 7.5 lakh crore budget outlay.

"You put an asset on the ground, which will be more productive over the next 50 years. That's where the huge multiplier effect of capital expenditure comes in," BJP Lok Sabha MP Jayant Sinha said at the BT Budget Roundtable.

The multiplier effect of infrastructure totally is 2.5 times, Sinha said, adding, that a rupee spent on road will give a return of 2.5 times the money that has been put in. "It also helps you create growth in future years," he added.

Sinha also pointed that certain aspects of infrastructure are even better. Citing an example he said, airport has an economic multiplier of six times.

"By making a bold and dramatic bet on capex and infrastructure, we have been able to sustain our growth," Sinha mentioned.

Talking about India's GDP growth, Sinha said that next year, global economy is likely to hit a recession or be very close to a recession. "With the global economy in a recessionary scenario, for us to be able to do a 6.5 per cent growth is absolutely remarkable and that is why India is being seen as a shining star globally."

The Centre's Economic Survey 2023-24 said that the economy is expected to grow between 6 per cent and 6.8 per cent in the next financial year starting April 1.

At the roundtable, Sinha also talked about the new income tax regime, under which significant changes were announced at the Union Budget 2023.  

The Centre has increased the income tax rebate limit from Rs 5 lakh to Rs 7 lakh under new tax regime.

"We want to make sure that we have a fair and transparent tax regime, that will result in better compliance and more people coming into the tax net. The new tax regime is taking you to that direction," Sinha concluded. 

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