Public capital expenditure should gradually be brought closer to 3 percent so that more financial resources are available for the private sector, economists said. In the FY26 Budget, the government budgeted around Rs 11.21 lakh crore for capital expenditure, higher than 3 per cent of GDP.
Economists attending the Prime Minister’s pre-Budget interaction have flagged growing fiscal pressures arising from rising interest obligations, weakening household savings and potential crowding-out of private investment, even as the government continues to rely on an elevated public capital expenditure push to support growth. Alongside fiscal issues, participants also focused on Atmanirbhar Bharat and the Viksit Bharat roadmap, sources said.
Prime Minister Narendra Modi at the meeting emphasised on the importance of addressing the aspirations of the nearly 25 crore people estimated to have moved out of poverty in recent years through improvements in health, education, jobs, skills and infrastructure, sources said.
Govt capex needs to be lower
Some of the senior economists, who participated in the meeting, said there was need for “…aligning fiscal policy more closely with the original Fiscal Responsibility and Budget Management (FRBM) framework, including a call to recalibrate government capital spending to around 3 percent of gross domestic product (GDP) from the current level of above 3 percent.”
