Budget 2022: Capex to rise 20% with focus on highway, railway
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Taking forward the thrust on capital expenditure to bring about economic growth, the finance ministry is likely to enhance allocation to infrastructure spending by over 20% from last year in the upcoming budget. Key ministries like highways and railways may see FY23 allocations go up by up to 30%.
A source close to the development told Fortune India, "Allocation to infrastructure may be hiked by about 20% over last year." With this, the allocation towards capital expenditure could be over ₹6.6 lakh crore in the budget, up by about ₹1 lakh crore from ₹5.54 lakh crore in 2021-22.
The source pointed out that highway ministry, railway ministry, housing, and health may get larger share in the capital expenditure allocation. In the health sector, though, the probability of higher allocation under the head of revenue expenditure is also very strong to support consumption needs in the sector on account of the ongoing pandemic.
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“The capex focus will be specifically on roads, railways, housing, and rural/urban infrastructure. Centre may also offer incentives to states to increase capex," said brokerage firm Emkay in its India Budget Preview released last week.
Highway allocation will be meant largely for construction on engineering procurement contract basis. The finance ministry had allocated ₹1,08,230 crore to the transport ministry for expenditure on highway construction. Emerging as the best performing ministry in terms of utilisation of the funds, the ministry has spent 69%, or ₹73,797.95 crore, during April-October this year. This is significantly higher than than 58%, or ₹47,690 crore, spent by the ministry during the April-October period of FY21.
On the back of the good show by the ministry, it is highly likely that the allocation to the sector may be enhanced by about 30% in the upcoming budget.
Both railway and the housing ministry may also witness higher allocation in the upcoming budget on the back of good utilisation of funds. During the first seven months of FY22, the Ministry of Railways has spent ₹60,434 crore against an allocation of ₹1,07,100 crore for the entire year. This translates into utilisation of 58% funds. The housing ministry too has utilised ₹13,816 crore, or 54% of the total allocation for the year at ₹25,759.01 crore during the period.
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