Budget 2024: Overall capex likely to increase by 50% for 2024-25, says expert

The Union Budget 2024, which is slated to be presented on Tuesday, July 23, is expected to increase the overall capital expenditure (capex) by nearly 50% for the ongoing fiscal year (FY24-25), a professor of a top business school said.

Moreover, the finance minister is expected to set an optimistic growth target of over 7.5% against the recent forecasts of 7% by the International Monetary Fund (IMF) and the Asian Development Bank (ADB), said Dr Trilochan Tripathy, Professor of Finance at XLRI.

To achieve this growth target, Tripathy said there is a need for a broad-based allocation of resources across sectors.

Finance Minister Nirmala Sitharaman will present the Budget in Parliament on Tuesday at 11 am.

The Union Budget will likely focus on expanding capital investment in several sectors, including infrastructure, construction, manufacturing and green energy, the expert added.

As regards capex, the professor added that over a period of time, the central government has increased the same by around 30% every year, and this year, a massive shift is expected.

The expert further expressed hope that the Budget will focus on “expanding capital investment in areas like infrastructure, construction, manufacturing, green sustainable energy, clean energy technologies and defence and aerospace as these sectors are the prospective growth drivers for the economy”.

Besides, Sitharaman is likely to formulate policies for private sector participation.

India is also well poised for development in the defence sector, with the government focusing on increased investment in sectors like ports, railways and aviation, said Tripathy, who is also an Assistant Dean at XLRI.

The Centre could offer incentives or tax breaks to private players for investment in defence production and supplies, as well as implement special schemes to attract MSMEs and startups for supporting the sector, the expert said.

“To strengthen the defence production ecosystem, the government may collaborate with other countries or foreign companies for technology and knowledge transfer,” Tripathy said. According to him, the government’s investment focus will also be on green hydrogen policy, green energy production and transmission, public digital platform development, high-tech manufacturing sectors like semiconductors and medical devices and artificial intelligence.

“Investments in these areas will foster economic growth, drive innovation and social development along with achieving India’s net zero emission target by 2070,” he said.

A comprehensive agricultural policy to make India self-reliant in foodgrain production might also be on the cards, the professor added.