INSTANT VIEW-India budget to raise capex by 33% as jobs, infrastructure take priority

Since taking office in 2014, Modi has ramped up capital spending including on roads and energy, while wooing investors through lower tax rates and labour reforms, and offering subsidies to poor households to clinch their political support. COMMENTARY: VIVEK KUMAR, ECONOMIST, QUANTECO RESEARCH, MUMBAI "The 10 lakh crore rupees budget for capex will take the Capex/GDP ratio to 3.3%, a 20-year high.

India's government will raise its capital expenditure by 33% to 10 trillion rupees ($122.29 billion) in the next fiscal year, the finance minister said on Wednesday, as Prime Minister Narendra Modi tries to create jobs ahead of a general election. Since taking office in 2014, Modi has ramped up capital spending including on roads and energy, while wooing investors through lower tax rates and labour reforms, and offering subsidies to poor households to clinch their political support.

COMMENTARY: VIVEK KUMAR, ECONOMIST, QUANTECO RESEARCH, MUMBAI

"The 10 lakh crore rupees budget for capex will take the Capex/GDP ratio to 3.3%, a 20-year high. In the backdrop of anticipated slowdown in global growth, reliance on public capex as a countercyclical policy will help in supporting overall growth. With state finances incrementally getting better, there is hope that this could be supplemented by an uptick in capex by states in FY24. This we believe would help attract private investments as soon as the global growth cycle stabilizes." UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI

"The Union Budget has adequately focused on the holistic development of the economy with special emphasis on infrastructure, MSME financing needs and affordable housing. The surge in capex spending, if achieved, will assure a significant multiplier effect on the overall medium-term growth prospects of the economy."

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