The surprising gap in India’s capex binge

livemint.com:

₹11 trillion in 2024-25—almost 4.5 times the level in 2014-15. It represents 3.4% of projected GDP, up from 2% nine years ago. Capital expenditure is seen as the building of assets that yield social and economic benefits over time—for example, road, bridges and ports.

Increasing the share of government capex in overall spending has been an elusive goal for much of the reform period. Successive governments, when faced with the task of meeting fiscal deficit targets, have taken the axe to capital expenditure rather than revenue expenditure (running expenditure on items like salaries and interest payments on debt that don’t yield a future benefit). Thus, the capex push by the government in the last few years is a welcome break from this tradition.

“This substantial increase in recent years is central to the government’s efforts to enhance growth potential and job creation, crowd-in private investments, and provide a cushion against global headwinds," finance minister Nirmala Sitharaman said, in her budget speech last year. But where is this money going and what is it being spent on? While the rise in expenditure labelled by the government as capex has undeniably risen, it’s also worth putting this increase in perspective, and looking at the structural shifts that underpin this increase, especially as some of them take away some sheen from the headline numbers. Apart from the government budget documents, capital expenditure data is also compiled by the National Statistical Office (NSO) to calculate gross domestic product (GDP) estimates.