According to the Economic Survey 2022–23, capital spending has started to stimulate private investment, and the Budget target of Rs. 7.5 lakh crore for the current fiscal year is expected to be met.
Govt. to accomplish Capital Expenditure Target in FY 23
Another growth driver for the Indian economy was the central government’s capital expenditures (capex), which rose by 63.4% year over year in the first eight months of FY23 and have been outpacing private capex since the January-March 2022 quarter, according to the report.
It states,
“On the current trend, it appears that the full year’s capex (announced in the Budget) will be met,”
It added that the strengthening of corporate balance sheets and the attendant rise in credit financing it has been able to produce will soon lead to a sustained increase in private capex.
To continue the public investment-led recovery of the pandemic-damaged economy, the Finance Minister increased capital expenditure (capex) by 35.4% for the fiscal year 2022–23 to Rs 7.5 lakh crore. The previous year’s capex was estimated at Rs. 5.5 lakh crore.
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Strong emphasis on Capital spending
The government placed a strong emphasis on capital spending to boost the economy after the outbreak. It was anticipated that a rise in government spending would discourage private investment.
According to the survey’s estimates of the country’s capex multiplier, the economic output of the nation is expected to rise by a factor of at least four, at least.
It added that, like the Central government, states have a higher capital Budget supported by the Centre’s grant-in-aid for capital works and an interest-free loan repayable over 50 years. Overall, states are performing well with their capex goals, it said.
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