The Indian government plans to slow down the pace of capital investment growth in the coming fiscal year due to a slowing economy and weaker tax revenue.
source - canva
Food and fertiliser subsidies that help two-thirds of India's population will also be scaled back, according to a Reuters poll of economists.
source - canva
Prime Minister Narendra Modi's government has more than doubled capital spending since fiscal 2019/20 to make India a more attractive destination for global manufacturing.
source - canva
Private investment has lagged behind the government's lead for about a decade.
source - canva
The robust pace of government investment is expected to slow to barely half its previous rate in the fiscal year to March 2024.
source - canva
Capital expenditure (capex) is set to increase by about 17% to 8.85 trillion Indian rupees ($109 billion) in fiscal 2023/24.
source - canva
This is an increase from an estimated 7.50 trillion rupees in the current fiscal year, which is itself up roughly 35% on the previous year.
source - canva
The absence of a robust recovery in private capex will make public capex particularly important in the fiscal year 2023-2024.
source - canva
However, due to the current economic scenario, it will be challenging for the government to meet the desired capex target.