Budget 2025 needs to boost infrastructure spending for GDP growth
Union Budget 2025 approaches, leading experts are calling for a significant increase in infrastructure spending to catalyse India's economic growth. The government is urged to go for an 30% annual rise in infrastructure allocations, with demands for the upcoming budget to push capital expenditure to ₹18 lakh crore from last year’s ₹11.1 lakh crore base.
Annual increase in capital expenditure is crucial to reversing GDP slowdown and achieving the nation's ambitious economic goals. A robust budget allocation and proactive private-sector participation will be pivotal in ensuring sustainable and inclusive growth.
Budget 2025 fix for slowing capex impacting growth
Vinayak Chatterjee, Founder & Managing Trustee of The Infravision Foundation, told ET Now there are adverse effects of reduced capital expenditure on GDP growth. He noted that while prior budgets maintained a 30% annual increase in infrastructure allocations, the FY25 budget broke this trajectory with a mere 10% rise. This deceleration, coupled with a slowdown in actual government spending, has contributed to GDP underperformance.
Chatterjee cited research by former RBI Governor Dr. C. Rangarajan, which linked subdued public expenditure in infrastructure to slower economic growth. One rupee spent on infrastructure generates three rupees in GDP, whereas expenditure on items like direct benefit transfers (DBT) yields only a 90-paisa return, he said.
Strong case for infrastructure investment in Budget 2025
To address the current economic challenges and
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