India’s effective capital expenditure allocation of ₹15.1 lakh crore in Budget 2025 accounts for 4.5% of GDP, while the fiscal deficit stands at 4.4%, indicating that almost the entire borrowing of the central government is directed toward capital expenditure, Department of Economic Affairs (DEA) Secretary Ajay Seth said on Monday.Speaking at the Budget Verdict townhall event organised by CNBC-TV18, Seth highlighted the government’s strategy to maintain capex at elevated levels relative to GDP, with additional contributions from state governments and private sector investments. “Five years ago, capex was about 1.5% of GDP. Today, it exceeds 3%. If we include grants to states for capital projects, such as the Jal Jeevan Mission, the total capex provision reaches ₹15.5 lakh crore, or 4.3% of GDP,” he said.
He noted that the government has continued to increase capex despite fiscal constraints, with next year’s allocation rising 18% over revised estimates for the current year. While implementation capacity remains strong, he stressed the need to expand into newer sectors like urban infrastructure, which has been allocated an additional ₹10,000 crore, alongside social sectors and public-private partnerships.
Although the limits of capital expenditure have been reached, Seth said, “the push now must come through renewed efforts in emerging sectors.”Also Read: MeitY secretary says electronics components PLI in the works
