Centre’s capital expenditure cut logistics cost for businesses: FM Sitharaman

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₹43.5 trillion for building infrastructure in the last 10 years, which boosted the economy through a multiplier effect, while lowering logistics cost for businesses, finance minister Nirmala Sitharaman said on Wednesday. The minister said in a social media post that better road connectivity attracts investments and boosts local businesses by improving market access and reducing logistics costs.

“Due to better roads, there is a significant potential savings of ₹2.4 trillion to ₹4.8 trillion annually in logistics costs," the minister said. Sitharaman said the gross budgetary support allocated for capital expenditure since 2014 is a 3.72-fold increase compared to that of the period from 2004 to 2014.

The minister’s comments about the government’s strategy of scaling up infrastructure expenditure comes in the wake of both the ruling Bharatiya Janata Party and the opposition Congress party highlighting the economic and fiscal performance of their terms in office, during the ongoing national elections. “Spending on infrastructure not only boosts gross domestic product (GDP) growth through its multiplier effects on consumption and investment but also improves the long-term efficiency of the economy by reducing logistical constraints," the minister said in the post, quoting a study by the National Institute of Public Finance and Policy (NIPFP) which said ₹1 spent on capital expenditure in the country increases economic output by ₹4.80.

“Our government significantly increased the outlay for capex. As a proportion of total expenditure, capex rose to over 21% in 2023-24, compared to just 12% in 2013-14," the minister said.