Where is India’s capex going?

Defence corners significant proportion of capex push

Although the finance minister kept the capital expenditure target unchanged from the interim Budget at Rs 11.11 lakh crore, it still marks a 16.9 percent increase from the previous year.

This year’s allocation is Rs 1.6 lakh crore higher than last year's spend of Rs 9.5 lakh crore. A Moneycontrol analysis of 102 departments in the Budget shows that five departments cornered most of it.

From Rs 1.6 lakh crore, Rs 60,000 crore will go to the department of economic affairs as outlay for other general services, which will be assigned to respective ministries later, and another Rs 47,000 crore will be allocated to states.

Of the over Rs 50,000-crore increase, defence, communications, railways, roads and police will account for over 90 percent of the spend.

The defence budget is up 9.4 percent from the previous year, while telecom capex is 20.5 percent higher. Police services also got a capex push with a 32.8 percent increase in capital allocation.

In absolute terms, defence and telecom capex is up by Rs 14,000 crore each, while Railways is up Rs 12,000 crore. Police capex is likely to be higher by Rs 3,300 crore in FY25.

The biggest losers are law and justice, atomic energy and civil aviation, where capex is down Rs 2,400 crore, Rs 1,142 crore and Rs 672 crore from the previous budget.