Home Business India FY24 capex may rise 30% with focus on growth – Barclays

India FY24 capex may rise 30% with focus on growth – Barclays

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MUMBAI — India’s federal government is

likely to increase capital expenditure by 30% to 9 trillion

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rupees ($110.59 billion) in the next fiscal year to fuel growth,

Barclays said.

“In a pre-election year, we do not expect any material push

to increase the pace of fiscal consolidation, and any extra

fiscal room is likely to be spent in order to ensure economic

growth remains robust,” economists Rahul Bajoria and Shreya

Sodhani said in a note on Friday.

The analysts expect capital expenditure (capex) to cross

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19.5% of total government spending for the first time ever.

Barclays expects funds to be reallocated from programs

such as last year’s vaccination drive to other expenditure,

perhaps targeting the outlay for healthcare sector.

India will present its budget for 2023-24 on Feb. 1, and

this would be its last full-year budget before the general

elections of 2024.

The government could continue to prioritize capex, as

revenue expenditure looks set to be broadly steady, allowing for

further fiscal consolidation.

Barclays expects the government to target a fiscal deficit

of 5.8% of gross domestic product, down from 6.4% in this

financial year, with total expenditure pegged at 46 trillion


“The government is also likely to continue to support its

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production-linked incentives (PLIs), which are starting to bear

fruit with production and exports rising in several areas,

including electronics,” the economists said.

The foreign brokerage also expects the government to use

resources from state-run companies to fund capital projects.

The central government may increase budgetary allocation for

loans to states for capex to 1.50 trillion rupees from 1

trillion rupees this fiscal to enable more infrastructure

spending, Barclays said.

Expectations of fiscal deficit and borrowing targets in

trillion rupees for FY24

Brokerage name Fiscal deficit Centre Centre State State

(% of GDP) gross net gross net

Goldman Sachs 5.9 16.8 13 8 5.3

Barclays 5.8 – – – –

Societe Generale 5.5-6 – – – –

DBS 5.9 15.5 – – –

ICRA 5.8 14.8 10.4 9.6 6.8

($1 = 81.3820 Indian rupees)

(Reporting by Dharamraj Dhutia; Editing by Dhanya Ann Thoppil)


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