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India’s infrastructure dreams are scaling new heights! For the upcoming fiscal year has played a key role in accumulating infrastructure for the country and future contingencies. The Union government proposed ₹ 11.7 lakh crore for Capex it means it has been proposed 33% higher than ₹ 8.85 lakh crore of the FY24.
This is fact because comparing the FY25 with the previously introduced budget the FY25 budget is much more detailed and way more demanding. Transport equipment for FY 24 admits heavy demand of machinery in transport and housing sectors and out of the overall share has been allocated for ministry of railway and road transport. But FY25’s allocation not only builds on this foundation- it expands its scope:
Ministry of Road Transport and Highways: In an attempt to concentrate on the improvement in the road infrastructure we have initially provided ₹2.78 lakh crore for the FY25 as against the budgeted ₹2.59 lakh crore for the FY 2023-24.
Ministry of Railways: Of ₹2.55 lakh crore in FY25, 6.25% rise from FY24, the railway’s primary focus is to develop improved structures and networks, which, in turn, would drive capacities up.
State-Level Capex Incentives: New interest free special loans amounting to ₹ 1.5 lakh crores shall be extended to the states. This is a very important move to compel other state governments to increase their investment on the infrastructure.
The government stays committed to a responsibility to fiscal prudence though it has raised this spending. FY25: Fiscal deficit is expected to decline to 5.9% of GDP in FY 25 from 6.4% in the FY 24. The pro-cyclicality of fiscal consolidation has, however, been maintained to preserve the stability of macro-economy –while the growth tempo persists against a backdrop of a rising Capex.
It also clears the way for more efficient disbursement of funds across the year later when the second quarters climb for ministries and the states to up the tempo of work on projects that might be slowed down by paperwork. It will also help to alleviate the sorts of pressure on the fiscal that are usually seen in the last month of the year, which experiences peaks of spending.
There are some of the drawbacks of this way of thinking detailed below the government however thinks that relaxation of spending constraints will have multiple repercussions on the economy. Increased infrastructures spending is expected will support FDI as well as private and public investments. This idea aligns well with the Viksit Bharat 2047 vision for India that would help to make India a leading economy of the world after creating a healthy economic dependency upon each other.
The increase in the ceiling for FY25 expenditure limits by the Indian government is strategic for two reasons. It is to help create the economy and employment and make India one of the largest economy in the world.
Thank you
Regards,
Kautilya, IBS Mumbai.
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