(MENAFN- IANS) New Delhi, Feb 1 (IANS) Finance Minister Nirmala Sitharaman has decided to continue with the high capital expenditure on big-ticket infrastructure projects in the highways, ports, railways, and power sectors with an allocation of Rs 11.21 lakh in the Budget for 2025-26, which represents an increase of 10.2 per cent over the Rs 10.18 crore that was spent on capex in 2024-25.
The figure is a modest 0.9 per cent higher than the Budget Estimate for 2024-25 at Rs 11.11 lakh crore which was a sharp increase over the capex for 2023-24. The entire amount of the Rs 11.11 lakh crore could not be spent during the current financial year because of the Lok Sabha elections which for followed by Assembly polls in some states, including Maharashtra.
Sitharaman proposed to reduce the capital expenditure target to Rs 10.18 lakh crore from Rs 11.11 lakh crore for this fiscal year.
The capex continues to remain at a robust level to spur growth and it must be seen in comparison to a high base, a senior official said.
He pointed out that the capex has been raised despite the government sticking to the fiscal consolidation path and reducing the fiscal deficit target to 4.4 per cent of GDP for 2025-26 from 4.8 per cent in 2024-25.
The Government has been consistently maintaining a high capex level as investments in big infrastructure projects drive up the economic growth rate and have a multiplier effect on creating more jobs and incomes in the economy.
Investments made in India's highways sector have translated to a more than 3-fold increase in the country's GDP due to the multiplier effect resulting from the creation of more jobs and incomes in the economy, according to an IIM Bangalore study.
The research study states that every unit of expenditure on highway construction has contributed to a 3.21-unit increase in the country's Gross Domestic Product (GDP).
The National Highways Authority of India spent a record Rs 2.07 lakh crore on the construction of national highways in 2023-24, which was a jump of 20 per cent compared to Rs 1.73 lakh crore spent in 2022-23 and Rs 1.72 lakh crore in 2021-22.
The allocation for highways in the 2025-26 budget has been fixed at Rs 2.72 lakh crore which is the same as the previous year.
According to the IIM study, which spans the 10-year period from 2013 to 2022, national highway development has led to a 9 per cent increase in household incomes, a 6 per cent rise in household expenditure, and a double-digit surge of 10.4 per cent in car sales.
It also highlights that the development of highways in the country has led to a close to 3 per cent reduction in transportation costs between factories and sources supplying raw materials and by 1.33 per cent between factories and customers that buy the finished products, reflecting an improved efficiency in the supply chain.
The study points out that the new highways have given a fillip to the agricultural sector as well as MSMEs (micro, small and medium enterprises) which account for a major share of employment in the country.
According to official figures, the length of India's National Highway network has surged by 60 per cent in the last 10 years from 91,287 km in 2014 to 146,195 km in 2024, making it the second largest road network in the world.
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