NEW DELHI: The central government kept the capital expenditure outlay at Rs 11.11 lakh crore for 2024-25, as was announced by Union Finance Minister Nirmala Sitharaman in her interim Budget ahead of the General Elections. Capital expenditure, or capex, is used to set up long-term physical or fixed assets.
“Significant investment the central government has made over the years in building and improving infrastructure has had a strong multiplier effect on the economy”, Nirmala Sitharaman said in her Budget speech, outlining the priority of her government on infrastructure.
“We will endeavour to maintain strong fiscal support for infrastructure over the next five years, in conjunction with imperatives of other priorities and fiscal consolidation. This year, I have provided Rs 11,11,111 crore for capital expenditure. This would be 3.4 per cent of our GDP”, she added.
#WATCH | #Budget2024 | Finance Minister Nirmala Sitharaman says, “Significant investments have been made to build robust infrastructure. Over 11 lakh crore rupees for capital expenditure have been allocated for infrastructure development. This would be 3.4% of our GDP…Private… pic.twitter.com/0Hjdvg4PjC
— ANI (@ANI) July 23, 2024
Last year, 2023-24, which was the last full Budget under the Prime Minister Narendra Modi-led government’s second term, the government proposed to increase capital expenditure outlay by 33 per cent to Rs 10 lakh crore, estimated to be 3.3 per cent of the GDP. In 2024-25, it is an 11.11 per cent raise in capex.
The substantial increase in capex 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.
On the fiscal consolidation front, presenting the Union Budget for 2024-25, Sitharaman pegged the fiscal deficit target at 4.9 per cent of gross domestic product (GDP). In the Interim Budget tabled on February 1, she pegged it at 5.1 per cent of GDP.
In 2023-24, the government pegged the fiscal deficit target for 2023-24 at 5.9 per cent of gross domestic product (GDP). Later, the fiscal deficit for 2023-24 was downwardly revised to 5.8 per cent.
The difference between total revenue and total expenditure of the government is termed the fiscal deficit. It is an indication of the total borrowings that may be needed by the government. The government intends to bring the fiscal deficit below 4.5 per cent of GDP by the financial year 2025-26.
“The fiscal consolidation path announced by me in 2021 has served our economy very well, and we aim to reach a deficit below 4.5 per cent next year,” Sitharaman said today. “The government is committed to stay the course. From 2026-27 onwards we will endeavour to keep fiscal deficit each year such that the central government’s debt will be on a declining path as a percentage of GDP,” she added. (ANI)