India likely to bank on higher capex to accelerate growth, say sources

According to highly placed sources who did not wish to be identified, there is a proposal to push for at least a 15-20% hike in capex, which could be announced in the upcoming interim budget.

As all eyes are on the upcoming interim budget, sources have told CNBC-TV18 that the government is yet again going to bank on a higher capex to accelerate growth.

According to highly placed sources who did not wish to be identified, there is a proposal to push for at least a 15-20% hike in capex, which could be announced in the upcoming interim budget. The government had earmarked Rs 7.5 lakh crore for capex in FY23, which was increased to Rs 10 lakh crore for FY24.

The sources revealed that a large chunk of capex will focus on infrastructure and strategic ministries, including the Ministry of Road Transport and Highways, the Railway Ministry and the Defense Ministry, in addition to driving growth and employment. Moreover, capex will also provide the much-needed cushion against global headwinds through crowding-in private investment.

Additionally, the government believes that capex has a tangible multiplier impact on manufacturing industries raw materials like cement, steel and construction equipment.

Fund Allocation

In road infrastructure, capex will focus on funding the expansion of four-lane highways, Greenfield Expressways and Access-Controlled Corridors.

In addition, for railways, capex will help in further modernization—modern stations, station redevelopment, implementation of Kavach systems, laying tracks and electrification, as per sources. “capex will also aid in expanding semi-high-speed Vande Bharat Express trains, the Amrit Bharat Express, and the expansion of railway connectivity in the North East,” sources added.

Additionally, capex is expected to aim for boosting infrastructure development, defence modernisation and exports, and further strengthening of border road infrastructure, along with a focus on Nari Shakti and ensuring the welfare of ex-servicemen.

The Budget 2023 saw the capex outlay rise for the third consecutive year to ₹10 lakh crore. Budget 2023 capex outlay was 3 times, 4 times and 5 times the outlay of Budget 2020, Budget 2017 and Budget 2014, respectively.