Finance Minister Nirmala Sitharaman has announced that India’s capital expenditure (capex) allocation for the fiscal year 2025-26 has been increased to ₹11.21 lakh crore, up from ₹11.11 lakh crore in the previous fiscal year. Addressing the Rajya Sabha during the Question Hour, Sitharaman emphasized that there has been no reduction in capex, countering claims of budget cuts.
The Finance Minister highlighted the proportional rise in loans provided to states under the 50-year interest-free special assistance scheme for capital expenditure. She stated, “Cutting down the capital expenditure is not the case with us,” reaffirming the government’s commitment to infrastructure development and economic growth.
The special assistance scheme, introduced in 2020-21, has seen consistent increments in loan disbursements to states. Sitharaman noted that ₹1.46 lakh crore had already been released to states in FY25, accounting for over 95% of the budget allocation for the scheme. She also acknowledged the time lag in monitoring the utilization of funds by states, adding that digital mechanisms are being employed to enhance transparency.
The capex push is part of the government’s broader strategy to boost economic productivity and create jobs. Sitharaman underscored the multiplier effect of capital expenditure, which enhances the economy’s productive capacity and drives long-term growth.
This announcement comes amid debates over revised budget estimates for FY25, which showed a reduction in capex and special assistance to states. Sitharaman’s clarification aims to dispel concerns and reinforce the government’s focus on fiscal discipline and developmental priorities.
