New Delhi: The Central government should target a capital spending of Rs11 lakh crore in the Budget for the next fiscal, rating agency ICRA said. The fiscal deficit target for FY2026 is estimated to be set at 4.5% of GDP, entailing a reduction of 25-30 bps over the projected 4.8% of GDP in FY2025 (vs. budgeted target of 4.9%). This, along with a likely dip in the revenue deficit, would allow for a capex target of ~Rs. 11 trillion for FY2026, similar to the budget estimate for FY2025, albeit 12-13% higher than the expected outgo in FY2025 (Rs. 9.7 trillion).
ICRA Chief Economist Aditi Nayar said last year’s record budgeted capital expenditure of Rs 11.11 lakh crore is likely to fall short by about Rs 1.4 lakh crore and the next year’s target should be fixed at the last year’s level with a focus on keeping borrowing within reasonable limits.
Between April and November 2024, capex spending stood at Rs 5.13 lakh crore, 46 per cent of the Budget estimates of Rs 11.11 lakh crore.
Also Read: Asus introduces new entry-level mini PC: Details
‘We are looking at a large shortfall in the current fiscal. For next year, we are hoping that we will get fiscal space to prioritise capex… For FY26, based on the revenue numbers…a fiscal deficit of 4.5 per cent of GDP will be quite reasonably achieved. That would allow us ?11 trillion of capex, a growth of 11-12 per cent over the number that we think is feasible for FY25,’ Nayar said.
Fiscal deficit is the difference between the total expenditure and revenue of the government. It is an indication of the total borrowing that is needed by the government.