The government is likely to allocate a greater share of the budget to capital expenditure (capex) to deal with the challenges of a deepening global economic downturn that may adversely impact India’s economic recovery.
The Budget 2023-24 is likely to be presented on February 1 during the Parliament’s Budget session.
The key infrastructure ministries are likely to see a significant increase in allocation while others may see modest hikes, the ET reported, citing officials familiar with the discussions.
Worth mentioning here is that the Budget 2022 allocated Rs 7.5 lakh crore to capex, nearly 35.4 per cent higher than the previous year’s figure of Rs 5.5 lakh crore. It was 19.02 per cent of the total expenditure of Rs 39.45 lakh crore. In the first six months of the current fiscal, the Centre spent 45. 7 per cent of the total allocation.
Citing an unnamed official, the financial daily said that a “balanced approach” will be crucial to this budget as this will be the National Democratic Alliance (NDA) government’s last full budget in its second term, as revenues next year are unlikely to be as buoyant and the headwinds in the global economy may have some impact on India. The next Lok Sabha elections will be held in April-May 2024.
The capex allocation is again likely to get a boost, including a separate line of credit for states, of about 20-25 per cent in the budget. “There would be no compromise on capex because that is much needed to support the economy,” another official told the daily, pointing out that the Centre would carry on with balanced spending without splurging. Railways, roads, and ports may see a massive rise in allocations, in line with the infrastructure push and their capacity to absorb large funds.
Further, a higher allocation to these sectors is a must to bolster the Gati Shakti programme. The finance ministry has conveyed to ministries to continue with their spending plans.
In their pre-budget discussions with Union Finance Minister Nirmala Sitharaman, economists and experts recommended the Centre increase capex, and high capital spending has aided economic growth and started to trigger private investment revival.
They are of the view that the global economy is unlikely to avoid a slump next year, the private sector may still not see a complete revival in capex, and thus urged the finance minister to continue increasing capex in a bid to help infrastructure investment.
