CAPITAL EXPENDITURE: ECONOMY
NEWS : Capex loan
to states may be 20% lower than Budget estimates
WHAT’S
IN THE NEWS?
The
government expects disbursement of interest-free, long-term loans to states for
capital expenditure to be 15-20% lower than the budget estimate for fiscal
2025, because general elections had dragged down spending in the first half of
the year.
Capital
Expenditure (CAPEX)
- Definition: Investments by the
government or private entities to build or upgrade physical assets.
- Impact: Has a multiplier effect on
the economy by increasing demand and economic activity.
Main
Types of CAPEX:
- Infrastructure Development: Investment
in public assets like roads, railways, airports, ports, power plants, and
water supply systems.
- Defence and Security: Spending on
defence equipment and security-related assets.
- Social Sector: Investments
in education, healthcare, and welfare to enhance quality of life.
Effective
Capital Expenditure:
- The budget’s
capital expenditure excludes government spending on capital assets made
through grants-in-aid to states and agencies, which is considered revenue
expenditure.
- Effective Capital Expenditure = Capital
Expenditure + Grants for Capital Assets Creation.
- Union Budget 2023-24: Effective
capital expenditure set at ₹13.7 lakh crore or 4.5% of GDP.
Source
: https://economictimes.indiatimes.com/news/economy/finance/capex-loan-to-states-may-be-20-lower-than-budget-estimates/articleshow/114662494.cms