Capital expenditure: Good fiscal in the works for sector

Public spending has been doing the heavy lifting to meet the ambitious goals envisaged in the National Infrastructure Plan (NIP), while the private-sector investment cycle remains in limbo. Not surprisingly, capital expenditure (capex) of the central government rose 26% on-year in fiscal 2021 despite the pandemic throwing up significant challenges on the revenue side. This focus on capex bodes well for the economy because of its higher multiplier effect compared with revenue expenditure.

Such government spending is expected to continue given that the Union Budget for this fiscal has penciled in a 26% increase in financial support. Capital expenditure of the central government rose 26% on-year to Rs 1.1 lakh crore in the first quarter of fiscal 2022,