Budget 2024: Capital expenditure increased by 11.1% to Rs 11.1 lakh crore

The government announced a 11.1% increase in capital expenditure to Rs 11.1 lakh crore for the 2024-25 fiscal year in the Union Interim Budget. This is expected to provide an overall boost to the economy as it would largely go into infrastructure projects in the country.

Presenting the Union Budget on Thursday, Finance Minister Nirmala Sitharaman said, “Building on the massive tripling of the capital expenditure outlay in the past four years, resulting in huge multiplier impact on economic growth and employment creation, the outlay for the next year is being increased by 11.1 per cent to eleven lakh, eleven thousand, one hundred and eleven crore rupees (Rs 11,11,111 crore). This would be 3.4 percent of the GDP.”

Growth corridors

A key element of the capital expenditure would be towards sectors such as railways and aviation.

The Budget outlined that three major economic railway corridor programmes would be implemented: energy, mineral and cement corridors, port connectivity corridors, and high traffic density corridors.

“Together with dedicated freight corridors, these three economic corridor programmes will accelerate our GDP growth and reduce logistic costs,” said the finance minister.

The Union Budget also highlighted the progress made by the government over the last 10 years in the aviation sector. It noted that the number of airports have doubled to 149, ensuring air connectivity to Tier II and III cities. Today there are 517 new routes carrying 1.3 crore passengers.

The Finance Minister remarked that Indian carriers have proactively placed orders for over 1,000 new aircrafts.

“Expansion of existing airports and development of new airports will continue expeditiously,” she said.

The Finance Minister also noted, “Every challenge of the pre-2014 era was overcome through our economic management and our governance ... In the full Budget in July, our government will present a detailed roadmap for our pursuit of ‘Viksit Bharat’.”

The increased outlay on capital expenditure was on expected lines as the industry was confident that the current government would continue its thrust on infrastructure development.

Commenting on the capex announcement, Dr Samantak Das, Chief Economist and Head of Research & REIS, India, JLL said, the infrastructure capex augmentation to 3.4% of GDP will have a multiplier effect.

"The focus on creating multimodal connectivity through new rail corridors, airport and road infrastructure enhancement will support the overall logistics ecosystem while fostering new growth corridors,” he said.