Representational Image/Rupee
Representational Image/Rupee

The government has increased its capital expenditure budget to step up expenditure on projects that generate employment and spur economic activity and growth.

Accordingly, Finance Minister Nirmala Sitharaman on Monday announced that Centre's capital expenditure budget for current fiscal has been increased by an additional Rs 25,000 crore from a level of Rs 4,13,000 crore provided for FY21.

The additional capex by the Centre would help in stimulating demand and growth in Covid affected economy. The GDP has already slid by around 24 per cent in the April-June quarter.

The additional capex by Centre will be made on roads, defence infrastructure, water supply, urban development, defence infrastructure and domestically produced capital equipment.

Allocations for this expenditure will be made in forthcoming Revised Estimate discussions of Ministry of Finance with concerned ministries, Sitharaman said.

The total boost to demand from government measures is estimated at Rs 73,000 crore, and all spending has to be done by March 31, 2021.

Sitharaman said that if the private sector also takes the measures as announced with regard to LTC for its employees, additional demand boost of Rs 28,000 crore could be generated, this taking the total demand measures at over Rs 1 lakh crore for FY21.

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