Nirmala Sitharaman Interview: FM says hopeful FY25 capex target will be achieved

Finance Minister Nirmala Sitharaman Friday said she is hopeful the 2024-25 Budget estimate of Rs 11.11 lakh crore for capital expenditure will be met. In a post-Budget interview with with Rahul Joshi, Editor-in-Chief, Network18, Finance Minister Sitharaman said, “…to increase it to 11 (lakh crore rupees), I am very hopeful that it will definitely get used. And the amounts which are given to states are also having high utilisation.” During Budget 2024, on 1 February, the Finance Minister announced the Centre’s capex target for next year will be a new record of Rs 11.11 lakh crore, up 11.1 per cent from the budget estimate for 2023-24. Even as the Finance Minister raised the capex target for the next financial year, the revised estimate for 2023-24 was lowered by more than Rs 50,000 crore from Rs 10 lakh crore. The 2023-24 capex target of Rs 10 lakh crore was missed primarily due to lower-than-anticipated utilisation by states of the capex loan scheme. While Rs 1.3 lakh crore had been budgeted for the Special Assistance as Loan to States for Capital Expenditure scheme for the current financial year, the revised estimate for the same is Rs 1.06 lakh crore. In the interview with Network18, Sitharaman defended the revised capex estimate of Rs 9.5 lakh crore, saying what had been achieved in “a matter of 12 months, is I think good enough”. “It’s not like we have done only Rs 2-3 lakh crores. We are closer to Rs 10 lakh crores,” Sitharaman said. For 2024-25, the government has retained the allocation for the scheme - under which interest-free loans are given to states for 50 years only for capex - at Rs 1.3 lakh crore. The Finance Minister, however, defended the states’ use of the capex loan scheme, saying “absorption has its own limits”. “Sometimes, reaching the target, however ambitious it is, to the last mile is difficult within 12 months. Had we given them a few more months, they will probably even complete that. But the conditions for these capital expenditure which I have announced since last 2-3 years is that the amount should be utilised within the year,” the Finance Minister said. “So many of the states which take the money, which are very good in implementing – in fact, I find states very enthusiastic in wanting to avail of these facilities - the difficulty comes if you restrict them to using it in 12 months, which is what we aim at,” Sitharaman added. “That’s why…you might reach 9, 9.2 (lakh crore) and not touch 10 (lakh crore),” she said.