Govt hikes public expenditure by 35% to Rs 7.5 lakh crore for FY23

The government on Tuesday proposed to significantly step up the public investment by raising capital expenditure by 35.4 per cent to Rs 7.5 lakh crore or 2.9 per cent of the GDP in the next financial year. Presenting the Union Budget in the Lok Sabha, Finance Minister Nirmala Sitharaman said the virtuous cycle of investment requires public investment to crowd-in private investment.

"At this stage, private investments seem to require that support to rise to their potential and to the needs of the economy. Public investment must continue to take the lead and pump-prime the private investment and demand in 2022-23," she said.

She said the outlay for capital expenditure in the Union Budget is being stepped up sharply by 35.4 per cent from Rs 5.54 lakh crore in the current year to Rs 7.50 lakh crore in 2022-23.

"This has increased to more than 2.2 times the expenditure of 2019-20. This outlay in 2022-23 will be 2.9 per cent of GDP," Sitharaman added.

She further said with this investment taken together with the provision made for creation of capital assets through grants-in-aid to states, the 'effective capital expenditure' of the central government is estimated at Rs 10.68 lakh crore in 2022-23, which will be about 4.1 per cent of GDP.

The government also proposes to issue sovereign Green Bonds for mobilizing resources for green infrastructure. It will be a part of the government's overall market borrowing in 2022-23 estimated at Rs 11.58 lakh crore.

The minister said the proceeds of Green Bonds will be deployed in public sector projects which will help in reducing the carbon intensity of the economy.