Union Finance Minister Nirmala Sitharaman on Saturday asserted that there is no reduction in the public spending on capital expenditure. “We continue to place emphasis on the multiplier effect that capital expenditure done by government has shown has sustained us. We continue on that, and with all this, our fiscal prudence has been maintained,” she said in press conference hours after presenting the Budget 2024-25.
Sitharaman’s comments come amid industry disappointment over the lack of significant increases in infrastructure spending. The Budget allocated Rs 2,55,445 crore to the Ministry of Railways for FY26, a negligible rise from Rs 2,55,393 crore in FY25. Similarly, the budget for roads and highways saw only a modest 3% increase, rising to Rs 2,87,333 crore from Rs 2,78,000 crore in the previous fiscal.
This muted growth contrasts sharply with expectations. Analysts had anticipated a 10-15% hike in budgetary allocations for these sectors, given India’s aggressive infrastructure expansion goals tied to the Viksit Bharat 2047 vision. The absence of any mention of rail and road infrastructure in Sitharaman’s Budget speech further fueled concerns.
Despite this, the Finance Minister emphasised a strategic shift in focus — from direct government spending to reviving public-private partnerships (PPPs) and accelerating asset monetisation.
Sandeep Upadhyay, Managing Director—Infrastructure at Centrum Capital, highlighted the government’s new asset monetisation plan for 2025-30, aimed at unlocking Rs 10 lakh crore for new projects. “This initiative is expected to enhance much-needed equity investments, boosting overall sectoral growth,” he noted.
Over the past decade, the national highway network has expanded by 60%, largely driven by successful PPP models. The government now aims to attract more private capital, leveraging the sector’s proven potential to deliver large-scale projects.
Additionally, the Budget introduced a Rs 1 lakh crore Urban Challenge Fund, designed to support urban development by financing up to 25% of bankable project costs. Mohammad Athar, Partner and Leader of Capital Projects & Infrastructure Development at PwC India, remarked, “There is significant focus on cities as engines for economic growth. This fund will catalyze urban infrastructure projects, driving development where it’s most needed.”
The Finance Minister also urged states to tap into the India Infrastructure Project Development Fund (IIPDF) to develop robust PPP proposals, signaling a clear intent to decentralize infrastructure development.