india-set-to-overshoot-capex-target-of-11-1-tn-for-fy25

India's economy has been facing various challenges in recent months, but the government remains optimistic about its growth prospects for the fiscal year 2024-25.

 

According to Ajay Seth, the Economic Affairs Secretary, there are no major risks to the country’s growth target of 6.5% to 7%, despite some hurdles.

One of the key areas of concern has been inflation, which reached a 14-month high in October.

 

The increase in prices has been driven mainly by food items like edible oils, onions, and tomatoes. However, Seth emphasised that food prices are the only significant challenge to inflation, and aside from that, the inflationary pressures are not seen as a serious issue for the broader economy.

 

This offers a sense of reassurance to both consumers and businesses, as inflation can heavily impact purchasing power and economic stability if it becomes uncontrollable.

 

India's capital expenditure (capex) program is another area of focus for the government. The government had set an ambitious target of 11.1 trillion rupees ($131.72 billion) for infrastructure spending in the 2024-25 fiscal year.

 

However, Seth pointed out that the country might not meet this target. The capex spending between April and September stood at just over 37% of the annual target, which is lower compared to the 49% achieved during the same period in the previous year.

 

The delay in the expenditure has been attributed to the national elections, which slowed down decision-making and project implementation.

 

Despite these challenges, the government has reassured that the capex target will likely be met, or possibly overshot by the end of the fiscal year.

 

A report also suggested that the government might relax the quarterly spending limits to ensure that it does not fall short of its capex goals.

 

The government’s infrastructure spending is crucial to maintaining India’s rapid economic growth, and any delay or shortfall could affect the overall economic trajectory.

 

Ajay Seth also expressed confidence that India’s economy would continue to grow strongly, driven by the government's ongoing efforts to boost investment in key sectors like infrastructure, renewable energy, and manufacturing.

 

The economic reforms and measures aimed at stimulating growth remain central to the government's strategy, even as the country grapples with inflationary pressures and other global economic uncertainties.