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Following a decisive victory in the recent Lok Sabha elections, the Modi government is poised to sustain its robust infrastructure spending, emphasising economic growth and job creation, according to The Financial Express.
In February, Finance Minister Nirmala Sitharaman announced an 11 per cent increase in capital infrastructure spending for the next fiscal year in the interim budget, raising the capital expenditure outlay to Rs 11.1 trillion. This follows a notable 33 per cent hike the previous year, highlighting the government’s dedication to extensive infrastructure development.
The planned capital expenditure for FY25 stands at Rs 11.1 trillion, reflecting an 11.1 per cent rise. Over the past four years, this consistent increase has driven economic growth, with infrastructure investments acting as a catalyst for job creation and attracting private investment.
Road and rail sector funding
Substantial funding is expected to be earmarked for the road and rail sectors. As noted by The Financial Express, the February budget allocated Rs 2.78 trillion to the Ministry of Road Transport and Highways, a 2.8 per cent increase from the previous year. Indian Railways was granted Rs 2.55 trillion, following last year’s historic allocation of Rs 2.4 trillion. These funds are designated for developing three major economic railway corridors and various modernisation projects.
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The new railway funds are earmarked for creating three economic corridors, the report said. These corridors focus on energy, mineral, and cement transportation, port connectivity, and high-traffic density routes. Part of the PM Gati Shakti initiative, these projects aim to enhance logistics efficiency, reduce costs, and alleviate congestion in the existing rail network, thereby improving both freight and passenger services.
The government is aiming to significantly enlarge the Vande Bharat train fleet. At present, around 80 Vande Bharat trains are in service, and the goal is to upgrade 40,000 existing rail coaches to Vande Bharat standards. This upgrade aims to enhance passenger safety, convenience, and comfort.
Additionally, as reported by The Financial Express, trials for Vande Bharat sleeper trains are set to begin soon, with operational services expected to commence within the next six months.
Impact of enhanced capex on infra
The continued emphasis on infrastructure spending is anticipated to yield significant economic benefits. Higher capital spending usually results in job creation, stimulates private consumption, and draws in additional investment. Enhanced transportation infrastructure will facilitate faster movement of goods and passengers, stimulating economic activity and improving efficiency.
Finance Minister Nirmala Sitharaman underscored the positive impact of these investments, noting that the new railway corridors will enhance freight logistics and passenger train operations. According to The Financial Express, the dedicated freight corridors and economic corridors are anticipated to boost GDP growth and lower logistical costs.
