New Delhi

The Economic Survey released on Monday highlights that increased spending in road transport, highways, railways, defense services, and telecommunications will significantly boost economic growth by easing logistical challenges and expanding production capacities. For FY24, the government’s capital expenditure reached Rs 9.5 lakh crore, marking a 28.2% increase from the previous year and 2.8 times higher than FY20 levels.

Private sector capital expenditure has also increased for the fiscal year ending in March, compared to FY23. The Survey points out that Gross Fixed Capital Formation (GFCF) is becoming a crucial growth driver, as reflected in its rising share of nominal GDP.

Government investments in infrastructure have been vital for growth, especially in a challenging global environment. This broad-based approach to capital expenditure is starting to attract private investment and is supported by grants-in-aid to states, encouraging them to boost their own spending on productive projects.

The Survey suggests that the government should focus on creating a supportive policy and regulatory framework to enhance the capacity of component manufacturers, improve the availability of skilled workers, and resolve resource and regulatory bottlenecks.