The center creates an ecosystem for domestic and foreign investments, underlined Minister of Finance Nirmala Sitharaman, and urges the private sector to answer. The minister added that banks and companies are in good health, which suggests that the time is ripe for private investments.
The Economic Survey, a State of the Economy Report, has emphasized that the efforts of the Union government should be supplemented with “sincere acceptance” of the need for public-private partnerships in infrastructure throughout the country.
Capital expenses or Capex are used to set up physical or fixed assets in the long term. In 2024-25, the central government spent the expenditure on capital expenditures at RS 11.11 Lakh Crore. It was an increase of 11.11 percent in Capex on an annual basis.
Building infrastructure – physical, digital and social – has been a central focus area for the government in the last five years. This has had various dimensions – increase in public spending on infrastructure, creating institutions to design approvals and implementation and innovative modes of the mobilization of resources.
“We create an ecosystem to increase the role of the public sector and to have policy such as disinvestment. We create an ecosystem for domestic and foreign investments. We help build an ecosystem,” Mrs. Sitharaman told NDTV in an exclusive interview .
The substantial increase in the Capex is central to the government's efforts to improve the growth potential and creating jobs, to offer public in private investments and a pillow against global headwinds.
On Saturday, the government announced the largest tax relief in at least a decade to encourage consumers to breathe new life into the growth in the fifth largest economy in the world, making millions of households shrink a huge relief of high inflation.
The economic growth of India is expected to slow this tax year to a low of four years because of the weak demand, in particular in urban areas where the costs of living have risen. The new structure will increase the disposable incomes, increase domestic consumption, savings and investments, Nirmala Sitharaman said in her budget speech.
“The rate of corporation tax was reduced in 2019 due to the double balance problem. Banks and companies are now in good health. They are waiting for passive investments. If consumption increases and there is a possibility to be greater investments, that is possible Being a good trigger, “the minister added.
The focus of the Union Budget 2025 on supporting households with lower and middle incomes could help to breathe new life into private investments in the economy, according to a report from HDFC Bank.
The report emphasized that consumer's demand has remained weak, which influences the business sentiment, but the latest budget measures can offer the necessary attempt to stimulate economic growth.
It stated: “A push for households with a lower and middle income-where the tendency to consume is highly able to offer the much-needed sentiment boost to let the private investment cycle roll.”
The report noted that capital expenditure generally has a stronger influence on economic growth compared to tax cuts. However, weak and fragmented consumer demand has been a key factor that stops investments in the private sector.
Since the COVID-19 Pandemie, the government has greatly increased the capital expenditure in the hope of making investments led by investments. Consumption in the Indian economy is stress under stress in the past quarters, while shoppers have sharpened their wallet strings in the midst of stubborn inflation and modest wage growth.
“With the margin there is a tilt to supporting consumption by tax cuts for households from the middle class, compared to the public Capex-Push that has been seen in the last four years,” said Sonal Varma, Chief Economist Nomura, India and Asia Ex -Japan.
Badal Yagnik, CEO of Colliers India, said that the rationalization of taxes and improvement of exemption limits can stimulate disposable income, stimulate consumption levels and investments in real estate, in particular in residential real estate and alternative financial instruments such as Reit's.
The government has also made room for homeowners to claim two self -processed property as tax -free, compared to just one earlier, a movement that will probably benefit residential real estate investments.
