Budget 2025: Will India Inc boost the economy with investments?

With the Budget 2025 keeping the capital expenditure target almost unchanged at ₹11.2 lakh crore, the focus has shifted to the private sector investment as the government wants the corporates to reciprocate and come up with more spending to steady the GDP growth and revive job creation. The government has been investing in the infrastructure sector for the last five years, but it found lesser support from private companies because of their cautious and conservative, balance sheet-focused, expenditure.

According to the Economic Survey tabled in the Parliament on Friday, the government has put a special focus on infrastructure — physical, digital and social — in the last five years and those efforts need to be supplemented with wholehearted acceptance from private sector.

The survey said: “The private sector must also reciprocate.”

“It is also clear that public capital alone cannot meet the demands of upgrading the country’s infrastructure commensurate with the requirements of Viksit Bharat@2047,” said in the survey document.

The capital expenditure by the government on major infrastructure sectors has increased at a trend rate of 38.8% in the FY2020-24 period.

According to a recent study by the Reserve Bank of India (RBI), the projected capital expenditure by private companies could rise to ₹2.45 lakh crore in FY25 from ₹1.59 lakh crore in FY24. The infrastructure sector attracted major share of envisaged capital investment, thanks construction of roads and bridges and power plants.

For giving support to the private players, FM Sitharaman announced in the budget that the government will come up with National Manufacturing Mission, which will cover small, medium and large industries by providing policy support and execution roadmaps. “Each infrastructure-related ministry will come up with a 3-year pipeline of projects that can be implemented in PPP mode. States will also be encouraged to do so and can seek support from the IIPDF (India Infrastructure Project Development Fund) scheme to prepare PPP proposals,” she said.

The government expects investments from private manufacturers in clean-tech, nuclear and shipbuilding. “Given our commitment to climate-friendly development, the Manufacturing Mission will also support Clean Tech manufacturing. This will aim to improve domestic value addition and build our ecosystem for solar PV cells, EV batteries, motors and controllers, electrolysers, wind turbines, very high voltage transmission equipment and grid-scale batteries,” said the FM.

Under Nuclear Energy Mission programme, the government plans development of 100 giga watt (GW) of nuclear energy by 2047 for the country’s energy transition. The government will amend the Atomic Energy Act and the Civil Liability for Nuclear Damage Act for facilitating the private participants. The government envisages to build at least 5 indigenously developed Small Modular Reactors (SMR) with an outlay of ₹20,000 crore by 2033.

The budget also wants private companies to invest in shipbuilding as the government is set to come up with permissions for constructing clusters across the country.

The private sector will have to shoulder more investment responsibilities because India's fiscal settings are constrained and the government might not be able to provide as much financial support as before, said global rating agency S&P recently. The government spent ₹66,000 crore per month on an average between April and November of FY25 on capital expenditure. Last year, during the same period, its monthly expenditure stood at ₹60,000 crore.