The Narendra Modi-led central government has shown confidence that it will return to power and build on the direction of its interim Budget for 2024-25 in July when the new full Budget for 2024-25 comes out, Larsen & Toubro's Chief Financial Officer R Shankar told Moneycontrol in an exclusive interview.
"The government in the Interim Budget has shown confidence that it will come back to complete the job. They have shown continuity of policy reforms in the form of allocation for farmers, youth and women, employment generation and lifting the underprivileged," Raman told Moneycontrol.
Finance Minister Nirmala Sitharaman announced an 11 percent jump in capital expenditure allocation to the infrastructure segment to Rs 11.11 lakh crore for 2024-25 as part of the interim budget. Raman awaits the quantum of budgetary allocation in the final budget for 2024-25 for more clarity on the government's plans.
"In the final budget, will the government go back to the higher capex spending? I am not sure. However, I expect that from a perspective of the next 3-5 years, government-led capital expenditure will create the pathway for the private sector to come and fill up," Raman said, adding that he expects the government to improve on the Rs 11.11 lakh crore capex for the infrastructure segment once it returns to power.
Raman added that the government's vision of creating three new railway corridors as announced as part of the interim budget for 2024-25 has set a theme and vision for the infrastructure industry to work on for the next 5 years.
"It's a bit too early to get into the specifics of these corridors, I think what was set out was some kind of a theme and the detailing has to be done," Raman said.
He added that the creation of these corridors would take at least five years if the government is incredibly dedicated and vigilant in its approach to push for the creation of these corridors.
"There's a considerable amount of clearances that are required on the ground to get the constructions of these corridors started, the actual construction and creation of the corridors will not take as much time as it is to get the corridor cleared up," Raman said, adding that it's a mammoth task facing the government.
The central government continued with its capex push in the interim Budget for 2024-25 but refrained from major announcements on infrastructure projects.
In her shortest budget speech ever as she presented the interim Budget of the government on February 1, Finance Minister Nirmala Sitharaman said, "Building on the massive tripling of the capital expenditure outlay in the past 4 years resulting in huge multiplier impact on economic growth and employment creation, the outlay for the next year is being increased by 11.1 percent to eleven lakh, eleven thousand, one hundred and eleven crore rupees (` 11,11,111 crore). This would be 3.4 percent of the GDP."
The government has increased the capex for 2024-25 by 11 percent to Rs 11.11 lakh crore. While this may be lower than the 15 percent increase many from the industry were expecting, it is still significant and will spur infrastructure growth.
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