Centre keeps capex at Rs 11.11 lakh crore or 3.4 pc of GDP

Finance Minister Nirmala Sitharaman on Tuesday kept India’s FY25 capex outlay unchanged at Rs 11.11 lakh crore, as earmarked in the Interim Budget in February.

This is higher than last year’s revised estimate of Rs 9.5 lakh crore.

The Finance Minister announced that the government will end up spending 3.4 per cent of the Budget on capex compared with 3.2 per cent in the previous year and almost double of what it spent five years ago.

The government’s capital expenditure for FY24 stood at Rs 9.5 lakh crore, an increase of 28.2 per cent on a YoY basis, and was 2.8 times the level of FY20.

The capital expenditure by private companies has picked up in the financial year ending March this year compared to FY23, according to the Economic Survey.

The Gross Fixed Capital Formation (GFCF) continues to emerge as an important driver of growth, as indicated by its rising share of nominal GDP.

The government’s thrust on capex has been a critical driver of economic growth amid an uncertain and challenging global environment. The focus of capex has been broad-based. Government capex has also begun to crowd in private investment.