Modest Rise In Capex To Rs 11.11L cr; Borrowing At Rs 14.13L cr Proposed

Generally, the government borrowing is done through various sources, including dated securities, treasury bills, external loans and state provident funds. However, the lower borrowing estimate for 2024-25 is on account of growing tax revenue and the government’s resolve to meet its fiscal consolidation roadmap.

The government had hiked capex by 37.5 per cent to Rs 10 lakh crore for the current fiscal. Against this, the government expects to spend Rs 9.5 lakh crore in the financial year ending March 2024. In the previous two years as well, the government had to increase the capex for infrastructure development by over 30 per cent to do heavy lifting as private investment was muted. “Now that the private investments are happening at scale, the lower borrowings by the central government will facilitate larger availability of credit for the private sector,” she said.

The money the government spends on building roads, railways, bridges, schools, hospitals, etc is an example of capital expenditure, which is most visible in the interim budget. Besides, it also includes money spent on building industries that generate profits for the government and buying or upgrading machinery involved in production, and upgrading of such productive assets too falls under capital expenditure.

About net borrowing estimate, Ms Sitharaman also said that it would be Rs 11.75 lakh crore during the next financial year. As a result, the government would make repayment of Rs 2,37,818 crore during the year. “The gross and net market borrowings through dated securities during 2024-25 are estimated at Rs 14.13 and Rs 11.75 lakh crore respectively. Both will be less than that in 2023-24,” she said.

Ms Sitharaman also said goods and services tax or GST has reduced the compliance burden, and the average monthly GST collection doubled to Rs 1.66 lakh crore. “The government resorts to market borrowings to bridge the gap between expenditure and revenue (fiscal deficit),” the finance minister added.

There are signs of private investment picking up in the steel and cement sector due to massive capital expenditure by the government. Against the estimate of Rs 10 lakh crore for 2023-24, the government has earmarked Rs 11.11 lakh crore during the next year. As per the revised estimate for FY24, the capital expenditure would be Rs 9.5 lakh crore, short by Rs 50,000 crore over the BE for the current fiscal.