Key Points
Government seeks robust public-private partnerships in infrastructure development
Capital expenditure increased by 38.8% from 2019-20 to 2023-24
Capex critical for growth potential and job creation
The State of the Economy report categorically asserted that the efforts of the Union government would need to be supplemented with "wholehearted acceptance" of the need for public-private partnerships in infrastructure across the country.
It emphasised that the private sector must reciprocate, too. Private sector's participation is "equally important".
Building infrastructure - physical, digital and social - has been a central focus area for the government in the last five years.
This has had various dimensions - increase in public spending on infrastructure, creation of institutions to de-bottleneck approvals and execution and innovative modes of resource mobilisation.
In 2024-25, capital expenditure has gathered momentum post-elections.
Prior to the elections, capex spending had been tepid, which had to an extent reflected in the quarterly GDP growth figures.
The pace of the Union government's capital expenditure in major infrastructure sectors was affected during Q1-2024-25, largely due to the model code of conduct during the general elections. The unusual patterns of
the last monsoon season also slowed down the progress of work.
"India's development aspirations require a substantial investment in infrastructure over the next decade. While estimates of the required spending differ in scale, there is general agreement that current infrastructure spending needs to be increased to achieve these objectives," the Economic Survey report read.
Reflecting this intent, the capital expenditure by the union government on major infrastructure sectors has been increased at a trend rate of 38.8 per cent from 201920 to 2023-24.
In 2024-25, the central government kept the capital expenditure outlay at Rs 11.11 lakh crore. It was a 11.11 per cent raise in capex year-on-year. A capital expenditure, or capex, is used to set up long-term physical or fixed assets.
The substantial increase in capex is central to the government's efforts to enhance growth potential and job creation, crowd in private investments and provide a cushion against global headwinds.
On the fiscal consolidation front, the government had pegged the fiscal deficit target at 4.9 per cent of gross domestic product (GDP). In the Interim Budget tabled on February 1, she pegged it at 5.1 per cent of GDP.
