In the budget speech, FM announced sharp increase in capex outlay for FY24. At Rs 10 lakh crore, public capex will be 3.3% of GDP. This announcement led to an uptick in the 10-year bond yield to 7.38%.
The 50-year, interest free loan to states for capex purposes has now been increased to Rs 1.3 lakh crore, 30% more than what was allocated for 2022-23. The finance ministry has previously said there has been huge demand for these interest-free loans from states.
The effective capital expenditure of the government has been estimated at Rs 13.7 lakh crore for 2023-24. In contrast, the effective capital expenditure for 2022-23, as per the budget estimate, was Rs 10.68 lakh crore.
It will be important to see if this increase leads to rise in capex by private sector companies.
This is a developing story and will be uploaded regularly
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