Union Finance Minister Nirmala Sitharaman announced a 35 per cent increase in the outlay for capital expenditure in Financial Year 2022-23 in her Union Budget 2022 speech on February 2, 2022.
The capital expenditure will be increased from Rs 5.5 lakh crore in Budget 2021-22 to Rs 7.5 lakh crore in Union Budget 2022-23. FM Sitharaman announced that the effective capital expenditure will be Rs 10.68 lakh crore or 4.1 percent of GDP in 2022-23.
The Finance Minister noted that the public capital expenditure has been raised to pump prime the investment cycle and support demand, thereby boosting India's economic recovery from the COVID-19 pandemic.
What is Capital Expenditure?
Capital expenditure is the amount spent by the government on the development of infrastructure, facilities, equipment etc. It also includes the expenditure incurred on acquiring fixed assets such as land and investment by the government, which will give profits or dividends in the future.
Capital Expenditure hike significance
The major hike in capital expenditure will provide a major boost to the economy and lead to job creation. The Finance Minister said that the virtuous cycle of investment is expected to revive on the back of capital expenditure and crowd in private investment. The total spending for the financial year 2022-23 has been estimated to be around Rs 39.45 trillion. This will constitute 2.9 percent of the GDP.
The government had significantly hiked capital expenditure last time as well by a record 26 percent to Rs 5.5 lakh crore. The increased government spending in form of capital expenditure will help push growth and jobs.
Green Bonds
Finance Minister Nirmala Sitharaman also proposed to issue sovereign green bonds to mobilise resources as part of the Government's borrowing programme.
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