Interim Budget 2024: Centre allocates ₹11.11 lakh crore to capital expenditure, up 11.1% from last year
Upstox
3 min read • Updated: February 1, 2024, 1:35 PM
Summary
In the Interim Budget 2024, the government allocated ₹11.11 lakh crore to capital expenditure for FY25, marking an 11.1% increase from the previous year. There's a focus on infrastructure development, particularly in transportation, healthcare, and education sectors. The budget reflects a strategic commitment to economic growth and quality of life improvement. While expectations were for continued upward trajectory in capital expenditure, the interim budget sets the stage for post-pandemic recovery, with a fuller budget anticipated after the general elections in May 2024.
Key takeaways:
- The government has allocated ₹11.11 lakh crore to capital expenditure for FY25.
- There has been an increase in allocations for infrastructure development, focusing on key sectors like transportation, healthcare, and education.
Finance Minister Nirmala Sitharaman announced today that the government will allocate ₹11.11 lakh crore to the capital expenditure in the financial year 2024-25 (FY25), which is 11.1% higher than last year’s expenditure. The allocation was ₹ 45.03 lakh crore in 2023-24, of which total capital expenditure is ₹10,00,961 crore – an increase of 35.9% from the ₹ 7.5 lakh crore allocated in the fiscal 2022-23.
Experts had expected that the interim Budget would build on the foundation laid in the previous Union Budget and the blueprint drawn for India@100. However, this sum is the Budgeted Estimate (BE) is expected to change, and revised numbers (RE) for the outgoing year (FY24) will be announced after the upcoming general elections.
India’s capital expenditure: A brief history
Over the past few fiscal years, India's capital expenditure allocations have exhibited discernible trends, reflecting the government's evolving priorities. Notably, there has been a consistent upward trajectory in allocations for infrastructure development, with a focus on transportation, healthcare, and education. This strategic approach aligns with the nation's pursuit of economic growth and improved quality of life for its citizens.
The government's commitment to bolstering the infrastructure sector is evident in the successive budgets, with a steady increase in allocations. The emphasis on transformative projects such as the 'Smart Cities Mission' and 'National Clean Energy Program' underscores a shift towards sustainable and technology-driven initiatives. Additionally, there has been a concerted effort to enhance healthcare infrastructure, a trend that gained momentum amid the challenges posed by the global pandemic.
What was expected?
Experts have consistently identified the government's emphasis on capital expenditure as a primary catalyst for the nation's economic expansion. India’s capex spends have also consistently been allocated towards infrastructure development and job creation. Given this perspective, there was an anticipation that the capital expenditure in this year’s interim budget will persist in its upward trajectory throughout the current fiscal year.
As we approach the upcoming general election in May 2024, the budget set to be revealed on February 1 will be a vote-on-account, with the full budget expected after the elections. In light of this, the interim budget isn't likely to bring about major changes, especially since it's the last budget before a new government potentially takes charge.
Conclusion
The finance minister, in outlining the capital expenditure priorities, emphasised the government's commitment to inclusive growth and development. The strategic allocation of funds is aligned with the vision of building a resilient and self-reliant economy. As the nation grapples with the challenges of the post-pandemic era, the Union Budget for FY24-25 signals a proactive/laidback approach to address pressing issues and pave the way for a brighter future.