 "infra, capex")
Finance Minister Nirmala Sitharaman announced a 16.9 per cent increase (against revised estimates) in infrastructure spending to Rs 11.11 trillion for the financial year 2024-25 (FY25) in the Interim Budget on Thursday. This is 11.1 per cent higher than the Budget estimates for FY24, as the Centre is expected to fall short of its FY24 infrastructure spending target of Rs 10 trillion by over Rs 50,000 crore.
Legacy infrastructure sectors, which have been doing the heavy lifting for the Centre in post-Covid Budgets, saw a moderate increase in their allocations. The Ministry of Road Transport and Highways has been allocated capital expenditure of Rs 2.72 trillion in the upcoming financial year, which is merely 2.9 per cent higher than FY24 RE (revised estimates).
Similarly, the Ministry of Railways has also seen a moderate rise. The budgetary allocation for capital expenditure for railways increased by 5 per cent for FY25 at Rs 2.52 trillion. The total infrastructure Budget for railways increased by 2 per cent at Rs 2.65 trillion.
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In a continuation of the Centre’s debt reduction strategy for government bodies, both the National Highways Authority of India (NHAI) and Railways, through its financing arm IRFC, will not be relying on external debt in FY25.
The NHAI’s capital expenditure allocation for FY25 has been kept at Rs 1.68 trillion, which is flat when compared to the FY24 RE.
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The apex highway body, last year, raised the issue of not being able to meet its highway awarding commitments, as the revised cost estimates for the Centre’s flagship highway programme Bharatmala Pariyojana have not been approved.
The increase in capital expenditure has received mixed reactions from the industry, as many had expected the infrastructure Budget to grow higher.
GP Hinduja, chairman of the Hinduja Group, said that India “could certainly do more on its infrastructure CAPEX budgeting which increased nominally (at 11 per cent).”
The finance minister also highlighted the strategic importance of the India-Middle East Corridor, which was announced at the G20 summit last year.
“Geopolitically, global affairs are becoming more complex and challenging with wars and conflicts. Globalisation is being redefined with reshoring and friend-shoring, disruption and fragmentation of supply chains, and competition for critical minerals and technologies. The recently announced India-Middle East-Europe Economic Corridor is a strategic and economic game changer for India and others. In the words of Hon’ble Prime Minister, the corridor ‘will become the basis of world trade for hundreds of years to come, and history will remember that this corridor was initiated on Indian soil,’” Sitharaman said.
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Meanwhile, ahead of the Lok Sabha elections, the minister also announced her intent to give an impetus to mass transit modes such as metro and rapid rail.
“We have a fast-expanding middle class and rapid urbanisation is taking place. Metro Rail and NaMo Bharat can be the catalyst for the required urban transformation. Expansion of these systems will be supported in large cities focusing on transit-oriented development,” Sitharaman said.
A notable increase in infrastructure spending is also seen in defence sectors, according to the Budget documents. The finance minister also said that the expansion of existing airports and development of new airports will continue expeditiously, citing India’s growing aviation sector.
