Election year, Interim Budget to provide capex boost

Continuing with the focus announced in previous Budget, the forthcoming interim Budget 2024-25 is likely to increase the outlay for capital expenditure by around 10 per cent to Rs 11 lakh crore. 

“We are optimistic about consumption and growth recovery for FY25. Capex utilisation has also been higher in many states this year,” an official said. 

Official data suggests the centre's capital expenditure between April and September 2023 reached 49 per cent of its budgeted target of Rs 10 lakh crore for the fiscal year. In September, the centre’s capital expenditure was Rs 1.16 lakh crore, marking the highest monthly expenditure this fiscal year. 

Over the years, key infrastructure agencies like the National Highways Authority of India and the Indian Railways have increasingly relied on Budget allocations too.  

The government may also continue providing long-term interest-free capex loans to states in FY25 to support economic activity nationwide.  

The Special Assistance to States for Capital Investment 2023-24 has been successful in creating capital investment projects in states covering health, education, irrigation, water supply, power, roads, and railways. It has also contributed to propelling India's economic growth, as capital expenditure has a higher multiplier effect.

Out of the total budgeted corpus of Rs 1.30 lakh crore in 2023-24, the union government has already sanctioned over 70 per cent to states under the scheme in the first seven months (April-October) of the current fiscal.

However, sources indicate the centre wants states to be vigilant in the utilisation of the funds and maintain accountability, which would be the key focus of the Department of Expenditure this year.

The government aims to maintain its glide path for fiscal consolidation, targeting 5.9 per cent for this year, and hopes to achieve a fiscal deficit of 4.6 per cent by 2026.

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