Budget 2024 to Focus on Infrastructure and Logistics with Increased Capex

By siliconindia  |  Wednesday, 19 June 2024, 11:22:55 AM IST

Budget 2024 to Focus on Infrastructure and Logistics with Increased Capex
The Union Budget for FY25 is anticipated to sustain the momentum on capital expenditure (capex), continuing the trend of recent years, with a projected 25% increase over the revised estimate of FY24. As the budget is scheduled to be presented in the latter half of July 2024, covering the expenditure for the eight months ending March 2025, concerns about the capacity to execute the elevated spending within this period have emerged among experts.
Madan Sabnavis, Chief Economist of the Bank of Baroda, pointed out the logistical challenges of deploying a significant capex increase over a compressed time frame. “The ability to spend on so many projects in eight months is limited. It’s easy to say we should have more capex, but do we have the capacity? To my mind, it will be a combination of things. If there are things in the manifesto, then there would be increased allocation towards that, including a token increase in capex”, Sabnavis said.
Industry bodies such as the Confederation of Indian Industry (CII) have emphasized the need for the capex boost to be directed towards enhancing rural infrastructure, including irrigation systems, warehousing facilities, and cold chains, which are crucial for supporting agricultural productivity and logistics.
Finance Minister Nirmala Sitharaman, in her interim budget, proposed a 16.9% increase in the Centre’s capital expenditure target for FY25, raising it to Rs 11.1 trillion over the revised estimates for FY24. This increment reflects the government's commitment to bolstering infrastructure development and accelerating economic growth through strategic investments.
Data from the Comptroller and Auditor General of India (CAG) reveal that in FY24, 25 states collectively achieved 84% of their budgeted capital expenditure. Notably, Uttar Pradesh, Telangana, Bihar, and Sikkim surpassed their targeted spending, underscoring effective utilization of allocated funds for infrastructure projects.
As the nation gears up for the new fiscal year, the emphasis on enhancing capex for infrastructure and logistics is expected to play a pivotal role in driving economic resilience and fostering sustainable development across various sectors. The upcoming budget will likely outline specific initiatives and funding mechanisms to address these strategic priorities.

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