Finance Minister Sitharaman: Capex spending up, not down in Lok Sabha

During the Union Budget debate in the Lok Sabha, Finance Minister Nirmala Sitharaman emphasized that capital expenditure outlays have increased, not decreased. She also noted that the funds allocated to states have not been reduced.

"World's scenario in last 10 years turned 180 degrees; making Budget is more challenging than ever before," said Finance Minister Nirmala Sitharaman. She explained that the government using 99 pc borrowings for capital expenditure, which is around 4.3 pc of GDP.

"This Budget has come at a time of immense uncertainties, and the change in global macroeconomic environment makes it challenging. So, if there are challenges which have actually made the Budget preparation with a lot more uncertainties, I have to at least put in front of the august House, that there are issues which are of global concern, which also have an impact on our own Budget making," said the Finance Minister.

"The government is focusing on bringing prosperity to the villages along with making agriculture, MSME, investment and export the growth engines," added Sitharaman in Lok Sabha.

"There is a continuation of global conflict in the Middle East, Russia-Ukraine War continues, stagnation in global GDP and sticky inflation in the emerging markets are all vitiate the atmosphere in the entire developing economies. We ideally have a situation which should encourage free trade, we are seeing no restriction, where we very strongly vouch for globalisation, we see lot more fragmentation, where we need fiscal prudence, we are seen rising debts..." said Union Finance Minister Nirmala Sitharaman.

Here are spotlights: Sitaraman on rupee slide:

• Multiple global and domestic factors impact the exchange rate of the Indian Rupee.
• Raghuram Rajan stated that the rupee has not depreciated significantly when seen in the real effective exchange rate.
• In this regard, Raghuram Rajan stated on January 15, "There's often focus on the rupee-dollar exchange rate, but actually, it is the strength of the dollar that is the primary issue: it is fundamentally a dollar issue."

Sitharaman on global uncertainties: The ever-present turmoil in the Middle East, the Russia-Ukraine confrontations, the stagnating GDPs of the world, and the continued high inflation in emerging nations are proving to be detrimental to developing economies. In an ideal situation, one should be able to enjoy free trade, but we seem to be going more towards restrictions. Despite strongly advocating for globalization, we are seeing greater fragmentation, and in a time when fiscal prudence is needed, rising debts are becoming a concern, she said.

Sitharaman on capex:

• Capex outlays have increased, not decreased, and the amounts allocated to states have remained the same.
• For 2025-26, the effective capital expenditure is 4.3% and the fiscal deficit is 4.4% of GDP, indicating that the government is using all borrowed funds for effective capital expenditure and asset creation.
• The government plans to allocate about 99% of borrowed resources to finance effective capital expenditure in 2025-26.
• Sectoral allocations for 2025-26 include Rs 1.71 lakh crore for agriculture, Rs 2.67 lakh crore for rural development, Rs 6.45 lakh crore for urban development and transport, Rs 2.27 lakh crore for health and education, and Rs 4.92 lakh crore for defense (excluding defense pensions).
• No capital expenditure accounts are being neglected.

Sitharaman on inflation:

• Managing inflation has been the government's top priority.
• The inflation trend, especially in food, seems to be moderating.