Budget 2019 India: The combined capex of the Centre and the central public sector enterprises (CPSEs) is estimated to be Rs 7.88 lakh crore in FY20, compared with Rs 7.5 lakh crore in FY19, largely maintaining the public sector investment momentum in the absence of a strong private sector push.

The Centre’s capex is estimated to rise 11.8% year-on-year to Rs 3.38 lakh crore in FY20, compared with Rs 3.03 lakh crore in FY19, while the CPSEs will invest about Rs 4.5 lakh crore, nearly the same as in the previous year.
“Capital expenditure is expected to increase at a fast pace in the medium term. It is anticipated that capital expenditure growth in FY21 and FY22 over the previous year will be 9.5% and 15%, respectively,” the government said. As a percentage of the GDP, the Centre’s capex is expected to be stable at 1.6% of the GDP in the medium term.

Capital expenditure in railways has increased over the years, but has taken a quantum jump since 2015-16. As against capital expenditure of Rs 1,33,397 crore in FY19, a capital outlay of Rs 1,60,176 crore has been envisaged in FY20, which is 20.1% higher over the previous year. Out of this, an amount of Rs 65,837 crore has been provided through gross budgetary support for capital expenditure.

Among the CPSEs and departmental arms, top investors (excluding budget support) include the National Highways Authority of India, which will invest Rs 75,000 crore in FY20, up from Rs 62,000 crore in FY19.
Similarly, ONGC will continue its robust investment with Rs 32,921 crore in the current financial year (compared with Rs 33,006 crore in FY19), followed by IOC at Rs 22,238 crore (Rs 20,923 crore), NTPC at `20,000 crore (Rs 22,300 crore) and Power Grid Corp at Rs 15,000 crore (Rs 28,487 crore).

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Economic expansion fell to a five-year low of 5.8% in the fourth quarter of FY19, as the investment growth collapsed and a slowdown in consumption accentuated.
But the government’s ability to boost capex is severely constrained by higher revenue spending (the PM-Kisan scheme alone will now cost Rs 87,000 crore in FY20, against Rs 75,000 crore budgeted earlier, thanks to its expansion recently).