New Delhi, Feb 6 : With an enhanced focus on employment generation, infrastructure development and economic growth, the outlay for capital expenditure in the Union Budget has been stepped up sharply by 35.4 per cent from Rs 5.54 lakh crore in 2022-23 to Rs 7.50 lakh crore in 2023-24.

The key announcement by Union Finance Minister Nirmala Sitharaman on February 1 during her budget speech was welcomed by all including the Industry and experts. The minister said capital expenditure has thus increased to more than 2.2 times the expenditure of 2019-20 and it would be 2.9 per cent of the GDP in 2022-23. Explaining the reason behind the rise in capex, the Minister said that the virtuous cycle of investment requires public investment to crowd-in private investment.

For the private investments to rise to their potential and to the needs of the economy, public investment must continue to take the lead and pump-prime the private investment and demand in 2022-23, said the Minister.

As per an estimate, each rupee of capital expenditure by the government adds nearly between Rs 2-3 to the gross domestic product (GDP) within a year or two. On the other hand, revenue expenditure, such as cash transfers, adds 90 to 99 paise to the GDP.

The rise in the capital expenditure also suggested the government's increased focus on all round infrastructure development from construction of highways and expressways, development of ports, airports and railways infrastructure.