How industry & experts reacted to the Budget 2023
The critical announcement by Union Finance Minister Nirmala Sitharaman on increasing capital expenditure to more than 2.2 times of the 2019-20 expenditure was welcomed by all including the industry and experts. The increase in capex is 2.9 percent of the GDP in 2022-23.
Explaining the reason behind the rise in capex, Sitharaman said that the virtuous cycle of investment requires public investment to crowd-in private investment.
With an enhanced focus on employment generation, infrastructure development, and economic growth, the outlay for capital expenditure in the Union Budget has been stepped up sharply by 35.4 percent from Rs.5.54 lakh crore in 2022-23 to Rs.7.50 lakh crore in 2023-24.
For the private investments to rise to their potential and to the needs of the economy, the public investment must continue to take the lead and pump-prime the private investment and demand in 2022-23, Sitharaman said.
As per an estimate, each rupee of capital expenditure by the government adds nearly Rs.2-3 to the gross domestic product (GDP) within a year or two. On the other hand, revenue expenditure, such as cash transfers, adds 90 to 99 paise to the GDP.
The rise in capital expenditure also suggested the government’s increased focus on all round infrastructure development from the construction of highways and expressways, to the development of ports, airports, and railways infrastructure.
To accelerate capital expenditure for the creation and upgradation of infrastructure in the economy, the government launched the National Infrastructure Pipeline (NIP) with a projected infrastructure investment of Rs.111 lakh crore during the period 2020-2025 to provide world-class infrastructure across the country and improve the quality of life for all citizens.
The NIP was launched with 6,835 projects, which has expanded to over 9,000 projects covering 34 sub-sectors. The NIP is expected to improve project preparation, attract investments into infrastructure, and play a pivotal role in economic growth.
Similarly, Gati Shakti (National Master Plan for Infrastructure Development) has been launched as a digital platform to bring ministries and departments together for integrated planning and coordinated implementation of infrastructure connectivity projects. It will also facilitate the last-mile connectivity of infrastructure and reduce travel time for people.
Officials said that by successively increasing public capex, the spending on infrastructure such as roads and railways will be able to attract private capex which will help keep the economy’s growth back on track. Moreover, the central government hopes for the wide multiplier effect of public capex which can create more jobs and spur demand, which can lead businesses and industry to spend more money on capital expenditure.
Industry bodies have welcomed the government’s initiative of a substantial rise in the capex.
Subhrakant Panda, president, FICCI, said, “A push to investment and consumption was required to keep the growth cycle in motion. We are happy to note that the government has continued the thrust on capital expenditure with a 33% increase in the capital outlay to Rs.10 lakh crore representing 3.3% of GDP. This is a step in the right direction amidst a global economic situation that is still not at ease. Moreover, the revision in tax rates under the new regime will augur well on the consumption side.”
“Thirty-three percent jump in the capital expenditure to Rs.10 lakh crore clearly demonstrates the government’s resolve to help India remain the fastest growing economy in the world, despite global headwinds,” ASSOCHAM president Sumant Sinha said, thanking the Finance Minister for maintaining the pace of capex for the third year in a row.
The Centre is also incentivizing the states to increase their capital spend as well on public infrastructure, taking the effective Centre’s capital investment to Rs.13.7 lakh crore or 4.5 percent of the GDP, he commended.
[With Inputs from IANS]
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[With Inputs from IANS]
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I thought letting Adani to develop infrastructure and it’s growth is the key for development of India.