DEA Secy Ajay Seth sees 'some under-shooting' of the FY25 capex target

Ajay Seth, DEA Secretary

There may be some 'under-shooting' of capex target of Rs 11.11 lakh crore, projected in the Union Budget, however, it will still be a 'significant increase' compared to last year's capex of Rs 9.5 lakh crore, DEA Secretary Ajay Seth said on November 20.

"Some sectors are a bit slow, but on the other hand, few others sectors are showing additional demand," Seth added, while speaking ahead of FICCI's 97th AGM and Annual Convention. Even last year's budgeted capex was higher at around Rs 10 lakh crore, and 95% of it was achieved. "Even this year, we should be around the same percentage," he added.

Seth underlined the government's commitment to driving public infrastructure and other high-priority investments, noting, “Capex spend will be better than last year. Delays due to elections will be made up, and growth in some sectors will balance the lag in others.”

Economic Growth Estimates on Track

Seth also said that he does not see any downside risk to the economic growth rate of 6.5-7 percent estimated in the Economic Survey 2024-25. "E-way bills, invoices in October do not indicate any downside risk to the 6.5-7 percent GDP growth in FY25." He further reiterated that the government is confident of meeting its fiscal deficit target of 4.9 percent for the year.

Inflation and Interest Rates

While inflation remains a concern due to erratic climatic conditions driving food prices, Seth remarked that “outside of food prices, inflation is not much of a challenge.” On monetary policy, he deferred to the Reserve Bank of India, stating, “The Central Bank will take a view on the interest rates.”

Seth advocated for long-term measures to build resilience in the Indian economy, describing the nation’s growth journey as a marathon rather than a sprint. “This is not a 100-meter sprint but a marathon. We need to focus on building capacities, reforming sectors, and ensuring market-driven efficiency to achieve long-term growth goals.”

Maximising Opportunities Under Trump

On President-elect Donald Trump's likely economic policies and their impact on emerging economies,  Ajay Seth said Government will work around to maximise opportunities for the country, but the geo-political tensions in Ukraine and the middle-east along with China's growth trajectory will be key factors to consider. If China's domestic demand does not revive, it could pose a challenge for all economies, he added, given the country's large manufacturing capacity. India needs to nurture long-term capabilities, he added, to make India into the factory of the world.

R&D Push 

Seth also touched on the government's plan to operationalise the Rs 1 lakh crore R&D fund announced in the Budget. “We are currently discussing the structure of the scheme with the financial and tech sectors, as well as India Inc. Our goal is to operationalise this over the next few months,” he said. He acknowledged that past tax exemptions for R&D had limited success and called for identifying frictions in MSMEs to foster partnerships between industries and governments.