Budget 2023 Economic Survey notes budget of 7.5L Cr for Capex focuses on infra-related sectors by Government [Read Report]

Budget 2023 - Economic Survey - budget of 7.5L Cr - Capex - focuses on infra-related sectors - taxscan

On February 1, 2023, the current government will publish its final full budget, which might mark a significant turning point. The Economic Survey, released before the Union budget, details what transpired in the previous year and how the nation expanded within the allocated funds.

According to the survey, the Indian government projected a record-breaking 7.5 lakh crore for capital expenditures for FY23, of which more than 59.6 percent had been spent between April and November 2022.

The Ministry’s Capex spending through December 2022 was ₹5 lakh crore (about 67% of the budgeted Capex of ₹7.5 lakh crore has been reached), compared to ₹3.9 lakh crore for the same period in FY22 ((i.e., till December 2021)), demonstrating the success of the initiatives.

The actual expenditure in FY23 is also 28 per cent higher than the expenditure in FY22 for the corresponding period.

In comparison to the long-term average rise of 13.5% observed in the equivalent period from FY16 to FY20, capital expenditure during this time had a Year over Year (YoY)  growth of nearly 60%.

Long-term impacts on growth are caused by the government’s emphasis on capital spending, notably in infrastructure-heavy industries like roads, trains, housing, and urban affairs.

The longer-term supply-side productive capacity is increased through capital expenditure, which on the one hand boosts aggregate demand and crowds in private spending at times of risk aversion.

Capital spending has been important as there are early indications of a recovery in private sector investments in recent months. The Center offered many incentives to encourage states’ capital expenditure in the form of long-term interest-free loans and capex-linked additional borrowing provisions in order to push for increasing Capex from all angles.

The government, in recent years, provided an increased impetus for infrastructure development and investment through the enhancement of capital expenditure.

This drive has taken place during a period of economic crisis when private sector capital spending has been curbed. From 5.5 lakh crore in the previous year (2021-22) to 7.5 lakh crore in 2022-23 (BE), the outlay (target) for capital spending saw a dramatic increase of 35.4%, of which roughly 67% was spent from April to December 2022.

As capital assets promote economic efficiency and potential growth, the continuous rise in public capital spending has supported economic growth while laying the groundwork for future growth.

Additionally, it might encourage private investment, as the International Monetary Fund (IMF) noted in the case of India. The fact that capacity utilisation has been increasing in the private sector is proof of this.

Subscribe Taxscan Premium to view the Judgment

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

taxscan-loader