Govt to raise infrastructure development capex by 33% for 2023-24: FM

India's Finance Minister Nirmala Sitharaman holds up a folder with the Government of India’s logo as she leaves her office to present the federal budget in the parliament, in New Delhi, India, February 1, 2023. Photo: Reuters

New Delhi: Finance Minister Nirmala Sitharaman on Wednesday announced hiking the capital expenditure by 33 per cent to Rs 10 lakh crore for infrastructure development for 2023-24 and will be at 3.3 per cent of the GDP.

Presenting the Budget for 2023-24, she said the newly established infrastructure finance secretariat will assist in attracting more private investment.

An expert committee will also be set up to make infrastructure classification and financing framework suitable for Amrit Kaal, she added.

On October 13 last year, Prime Minister Narendra Modi launched the Gati Shakti - National Master Plan, aimed at developing an integrated infrastructure to reduce logistics costs.

All logistics and connectivity infrastructure projects, entailing an investment of over Rs 500 crore, are routed through the NPG, constituted under the PM Gati Shakti initiative.

She also informed that the PM Particularly Vulnerable Tribal Groups (PVTGs) scheme would benefit 3.5 lakh tribals.

Experts' opinions

Vivek Kumar, Economist, Quanteco Research, Mumbai

"The 10 lakh crore rupees budget for capex will take the Capex/GDP ratio to 3.3 per cent, a 20-year high. In the backdrop of the anticipated slowdown in global growth, reliance on public capex as a countercyclical policy will help in supporting overall growth. With state finances incrementally getting better, there is hope that this could be supplemented by an uptick in capex by states in FY24. This we believe would help attract private investments as soon as the global growth cycle stabilizes."

Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank, Mumbai

"The Union Budget has adequately focused on the holistic development of the economy with special emphasis on infrastructure, MSME financing needs and affordable housing. The surge in capex spending, if achieved, will assure a significant multiplier effect on the overall medium-term growth prospects of the economy."

Garima Kapoor, Economist, Institutional Equities, Elara Capital, Mumbai

"The budget strikes an excellent balance between the need for growth with the need for inclusion, keeping the de-carbonisation and sustainable growth mandate in mind. The budget keeps in mind the needs of future India while focusing on Artificial Intelligence and machine learning.

"A mammoth 33 per cent increase in capex spending is encouraging although we need to see fine prints to assess the effective allocation. Lower-than-expected market borrowing is also bond market positive. I would surely give a thumbs up for the budget for its balanced focus on growth, inclusion, sustainability and fiscal consolidation."

(With inputs from PTI and Reuters)

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