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Increased spending in sectors such as road transport and highways, railways, defence services, and telecommunications will deliver higher and longer impetuses to growth by addressing logistical bottlenecks and expanding productive capacities, the Economic Survey said on Monday. 

The government’s capital expenditure for FY24 stood at Rs 9.5 lakh crore, an increase of 28.2 per cent on a YoY basis, and was 2.8 times the level of FY20.

The capital expenditure by private companies has picked up in the financial year ending March this year compared to FY23, according to the Survey.

It noted that Gross Fixed Capital Formation (GFCF) continues to emerge as an important driver of growth, as indicated by its rising share of nominal GDP.

The government’s thrust on capex has been a critical driver of economic growth amid an uncertain and challenging global environment.

The focus of capex has been broad-based. Government capex has also begun to crowd in private investment.

Additionally, the government continues to disburse grants-in-aid for the creation of capital assets to the states, thereby incentivising them to increase their productive spending, said the Survey.

“The focus of the government should be on creating an enabling policy and regulatory environment for the upgradation of capacity and know-how of component manufacturers, increasing the availability of trained human resources, and addressing resource bottlenecks and regulatory impediments," the survey noted.