MUMBAI — India’s federal government is
likely to increase capital expenditure by 30% to 9 trillion
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rupees ($110.59 billion) in the next fiscal year to fuel growth,
“In a pre-election year, we do not expect any material push
to increase the pace of fiscal consolidation, and any extra
fiscal room is likely to be spent in order to ensure economic
growth remains robust,” economists Rahul Bajoria and Shreya
Sodhani said in a note on Friday.
The analysts expect capital expenditure (capex) to cross
19.5% of total government spending for the first time ever.
Barclays expects funds to be reallocated from programs
such as last year’s vaccination drive to other expenditure,
perhaps targeting the outlay for healthcare sector.
India will present its budget for 2023-24 on Feb. 1, and
this would be its last full-year budget before the general
elections of 2024.
The government could continue to prioritize capex, as
revenue expenditure looks set to be broadly steady, allowing for
further fiscal consolidation.
Barclays expects the government to target a fiscal deficit
of 5.8% of gross domestic product, down from 6.4% in this
financial year, with total expenditure pegged at 46 trillion
“The government is also likely to continue to support its
production-linked incentives (PLIs), which are starting to bear
fruit with production and exports rising in several areas,
including electronics,” the economists said.
The foreign brokerage also expects the government to use
resources from state-run companies to fund capital projects.
The central government may increase budgetary allocation for
loans to states for capex to 1.50 trillion rupees from 1
trillion rupees this fiscal to enable more infrastructure
spending, Barclays said.
Expectations of fiscal deficit and borrowing targets in
trillion rupees for FY24
Brokerage name Fiscal deficit Centre Centre State State
(% of GDP) gross net gross net
Goldman Sachs 5.9 16.8 13 8 5.3
Barclays 5.8 – – – –
Societe Generale 5.5-6 – – – –
DBS 5.9 15.5 – – –
ICRA 5.8 14.8 10.4 9.6 6.8
($1 = 81.3820 Indian rupees)
(Reporting by Dharamraj Dhutia; Editing by Dhanya Ann Thoppil)