Govt prioritises 12.22 lakh crore capex plan despite fiscal stress, focusing on infrastructure amid global uncertainties
New Delhi
The government has said it will continue its planned capital expenditure of 12.22 lakh crore in the current fiscal year despite emerging fiscal pressures due to global uncertainties, including the ongoing West Asia conflict.
Expenditure Secretary V Vualnam stated that maintaining capital expenditure remains a top priority to sustain economic growth momentum, even as fiscal challenges intensify. He cautioned that the coming quarters and the next financial year could see multiple “stress points,” including potential impacts on tax revenue following recent fuel duty adjustments.
He added that while fiscal stress is a reality, the government is committed to ensuring that capital expenditure is maintained at budgeted levels. The focus areas for FY27 capex include highways, railways, ports, shipping, and urban development, aimed at strengthening infrastructure and long-term growth.
The official noted that global uncertainties, particularly rising crude oil prices due to geopolitical tensions, have created a difficult environment for India as a major importer of petroleum products. Despite this, he said India’s fiscal discipline has placed the economy in a relatively strong position.
The FY27 fiscal deficit target has been set at 4.3% of GDP, though revisions may take it closer to 4.5%. Revenue pressures have increased due to excise duty cuts on petrol and diesel aimed at controlling retail fuel prices.
He also highlighted risks related to energy imports, noting that India depends heavily on imported LPG, much of which passes through vulnerable shipping routes.
The government has also imposed export duties on diesel and aviation turbine fuel to ensure domestic supply stability. Officials said these measures are being reviewed periodically in response to changing global conditions.
In-short
- Government maintains 12.22 lakh crore capex
- Fiscal pressures rise amid global uncertainties
- Fuel duty cuts increase revenue stress
- West Asia conflict impacts economic outlook
- India prioritises infrastructure despite fiscal challenges