Budget FY23: FM Sitharaman announces massive capex support to economy

To sustain high growth rate, India's Federal Budget 2022-23 has earmarked a massive budgetary outlay of Rs 7.50 lakh crore for FY 2022-23.

In her Budget speech to Parliament on Tuesday, Finance Minister Nirmala Sitharaman proposed to increase the capital budget outlay by over 35 per cent.

"The outlay for capital expenditure in the Union Budget is being stepped up sharply by 35.4 per cent from Rs 5.54 lakh crore in the current year to Rs 7.50 lakh crore in 2022-23," Sitharaman said in her speech.

Presenting the Union Budget 2022-23, she said that the capital expenditure has thus increased to more than 2.2 times the expenditure of 2019-20 and it would be 2.9 per cent of GDP in 2022-23.

"The virtuous cycle of investment requires public investment to crowd-in private investment. At this stage, private investments seem to require that support to rise to their potential and to the needs of the economy. Public investment must continue to take the lead and pump-prime the private investment and demand in 2022-23."

Besides, the Finance Minister highlighted the role of capital investments in ensuring speedy and sustained economic revival and consolidation by creating employment opportunities, inducing enhanced demand for manufactured inputs from large industries and MSMEs, services from professionals, and helping farmers through better agri-infrastructure.

Furthermore, taking into account the Capex investment with the provision made for creation of capital assets through Grants-in-Aid to States, the 'Effective Capital Expenditure' is estimated at Rs 10.68 lakh crore in 2022-23, which will be about 4.1 per cent of GDP.

In addition, Sitharaman announced that sovereign 'Green Bonds' would be issued for mobilising resources for green infrastructure as a part of the government's overall market borrowings in 2022-23.

Accordingly, the proceeds would be deployed in public sector projects which help in reducing the carbon intensity of the economy.