India’s federal government has announced it will maintain its record infrastructure spending at ₹11.11 trillion ($132.85 billion) for the fiscal year ending March 2025. According to Finance Minister Nirmala Sitharaman, this decision, which is in line with the interim budget that was provided before the national elections, equals 3.4% of the nation’s GDP.
Over the last three years, the government has increased its commitment to infrastructure spending by twofold, with long-term capital expenditure growing from 1.7% of GDP in 2019-20 to 3.4% this year. ₹1.5 trillion has been set up for long-term state infrastructure loans for the current fiscal year.
India’s economy greatly benefits from infrastructure investment since it creates jobs and stimulates demand in several industries, including steel and cement. Even though India’s GDP grew by 7.8% in the March quarter, Prime Minister Narendra Modi has come under fire for not creating enough jobs, which harms private investment and consumption.
The stocks of capital goods companies fell 1.4% as a result of the maintained capital spending allocation, with Siemens and Larsen & Toubro declining 2.7% and 4%, respectively.
