Budget 2025: No reduction in public capital expenditure, confirms FM

Finance Minister Nirmala Sitharman today said there will be no reduction in the public capital expenditure and government would continue to spend on infrastructure.

Addressing the media during the post-Budget briefing, Sitharaman said, “There is no reduction in the public spending on capital expenditure. We continue to lay emphasis on the multiplier impact capital expenditure has shown and it has sustained us. We continue with that.”

It may be noted that the Budget 2025-26 has made an allocation of Rs 11.21 lakh crore towards public capital expenditure, which is almost flat compared with Rs 11.11 lakh crore allocated in the previous financial year. Additionally, against allocation for the current fiscal, revised estimate for FY25 has been pruned 8.34% to Rs 10.18 lakh crore. Poor utilisation on ground by the ministries concerned is mainly on account of erratic monsoons and election earlier in the year.

Like always, railway ministry and highways ministry have received a major chunk of the capital expenditure budgeted for 2025-26 in the budget. But there is no change in the allocation made to the railway ministry, and there is a minor hike in the allocation towards highways. Allocation to railways for FY26 remains unchanged at Rs 2,52,000 crore, while the capital expenditure allocation to the highways have been enhanced to Rs 2,87,333 crore, up 5.5% from Rs 2,72,000 crore allocated last year.

In the Budget, the government announced use of public private partnership (PPP) mode for infrastructure investments. Finance minister announced that the respective ministries will come up with a pipeline of projects to be taken up on PPP.

“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,” Finance Minister Nirmala Sitharaman said in her budget speech.

States, meanwhile, have been given support for infrastructure. “An outlay of Rs 1.5 lakh crore is proposed for the 50-year interest free loans to states for capital expenditure and incentives for reforms,” said Sitharaman in the speech.