ADOPTING CAPEX FOR GROWTH

Public infrastructure push to rev up the economy has been one of the significant aspects of budget making since 2021. But with the 2024 Lok Sabha polls around the corner, will the capex bandwagon still continue to roll?

- ASHUTOSH KUMAR

BUDGET 2022 pushed for economic revival by significantly enhancing the FY23 allocation to capital expenditure. The ministry’s preference for capex over alternatives such as consumption-led growth via demand push or direct fiscal stimulus was decided after a very ‘animated’ pre-budget discussion internally as the then principal economic advisor Sanjeev Sanyal put it. The key concern, however, was whether ministries will be able to utilise the allocations, and money will find its way into the economy. 

Post budget, Sanyal said the government had done its job and it was now up to the ministries to take the baton of economic revival ahead through public infrastructure. In Budget 2023, too, significant thrust was given to capex, but soon, the Russia-Ukraine war stoked conversations in the corridors of North Block about whether the revised estimates will be reduced. But the government continued its capex binge with the FY24 allocation of ₹10 lakh crore on the back of actual expenditure in FY23 surpassing revised estimate. Led by the ministries of highways and railways, the utilisation of budgetary allocations by ministries has followed the sprint. Actual expenditure between FY21 and FY23 at ₹17.55 lakh crore has, in fact, overshot the cumulative allocation of ₹17.16 lakh crore.