India's July-Nov 2024 capex growth shows strong focus on defence, railways, roads: Economic Survey
New Delhi: From July to November 2024, India's government capital expenditure (capex) rose by 8.2%, with sectors like defence, railways, and road transport making up 75% of the total outlay, according to the Economic Survey 2024-25 released on Friday.
Other sectors, including power and food and public distribution, also experienced significant year-on-year growth.
The Economic Survey, compiled under Chief Economic Advisor V Anantha Nageswaran, was tabled in Parliament by Finance Minister Nirmala Sitharaman.
The document signifies the start of the Budget 2025 session, with Sitharaman scheduled to present the Union Budget for FY26 on Saturday.
Capex growth over 5 years
Over the last five years, the government’s capital expenditure has grown at an average rate of 38.8%, showing a consistent push for infrastructure development and capital investment.
In FY25, capex surged three-fold compared to FY20 levels, with sectors like roads, power, coal, and mines seeing strong performance, especially benefiting transport infrastructure such as roads and railways.
However, the pace of infrastructure spending slowed in Q1 FY25 due to the Model Code of Conduct during the general elections, making direct year-on-year comparisons challenging.
Private investment and capacity utilisation
According to the Reserve Bank of India’s OBICUS, manufacturing capacity utilisation reached 74.7% in Q2 FY25, exceeding the long-term average.
A report on capital goods companies revealed that order books grew by 23.6% in FY24, with a 10.3% expansion in the first half of FY25.
The RBI’s private investment report also showed an increase in investment intentions, which rose to Rs 2.45 trillion for FY25.
Though investment activity slowed, the Survey expects a rebound in the coming quarters.
State spending
Between April and November 2024, state governments’ revenue expenditure grew by 12%, mainly due to a 25.7% rise in subsidies and a 10.4% increase in liabilities.
However, capital expenditure at the state level fell by 5.6%.
Despite this, 11 states increased their capex, indicating varied strategies for infrastructure development.
National Monetisation Pipeline
The National Monetisation Pipeline (NMP) aims to unlock value from government-owned assets.
Between FY22 and FY24, Rs 3.86 trillion worth of transactions were completed, approaching the Rs 4.30 trillion target.
The target for FY25 stands at Rs 1.91 trillion, with roads, power, coal, and mines leading the monetisation efforts.
Railways expansion
Indian Railways saw continued expansion in FY25, with the introduction of 17 new pairs of Vande Bharat trains and 228 coaches produced between April and October 2024.
Despite substantial investments, the Survey highlighted the ongoing high demand for infrastructure and the need for further efforts to close existing gaps.
Finance Minister Nirmala Sitharaman will present the Union Budget for 2025-26 on February 1.
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