Budget 2022 - Govt increases capex by 35% to Rs 7.50 trn in 2022-23

  • Industry News
  • Feb 01,22
In defence sector, 68% of the capital procurement budget will be earmarked for domestic industry in 2022-23, up from 58% in 2021-22. Defence R&D will be opened up for industry, start-ups and academia with 25% of defence R&D budget earmarked.
Budget 2022 - Govt increases capex by 35% to Rs 7.50 trn in 2022-23

New Delhi

Presenting the Budget 2022-23, Union Finance Minister Nirmala Sitharaman said that India’s economic growth in the current year is estimated to be 9.2%, highest among all large economies. The overall, sharp rebound and recovery of the economy from the adverse effects of the pandemic is reflective of the country’s strong resilience. 

The Finance Minister stressed that public investment must continue to take the lead and pump-prime the private investment and demand in 2022-23 and, therefore the outlay for capital expenditure in the Union Budget is once again being stepped up sharply by 35.4% from Rs 5.54 trillion in the current year to Rs 7.50 trillion in 2022-23. This has increased to more than 2.2 times the expenditure of 2019-20 and this outlay in 2022-23 will be 2.9% of GDP. With this investment taken together with the provision made for creation of capital assets through Grants-in-Aid to States, the ‘Effective Capital Expenditure’ of the Central Government is estimated at Rs 10.68 trillion in 2022-23, which will be about 4.1% of GDP.

Reflecting the true spirit of cooperative federalism, the Central Government enhanced the outlay for the ‘Scheme for Financial Assistance to States for Capital Investment’ from Rs 100 billion in the Budget Estimates to Rs 150 billion in the Revised Estimates for the current year. Moreover, for 2022-23, the allocation is Rs 1 trillion to assist the states in catalysing overall investments in the economy. These fifty-year interest free loans are over and above the normal borrowings allowed to the states. This allocation will be used for PM GatiShakti related and other productive capital investment of the states.

Nirmala Sitharaman emphasised that this Budget continues to provide impetus for growth. It lays a parallel track of (1) a blueprint for the Amrit Kaal (the 25-year-long leadup to India@100), which is futuristic and inclusive that will directly benefit youth, women, farmers, the Scheduled Castes and the Scheduled Tribes. And (2) big public investment for modern infrastructure, readying for India at 100 and this will be guided by PM GatiShakti and be benefited by the synergy of multi-modal approach. 

Elaborating the PM GatiShakti, the Finance Minister said that it is a transformative approach for economic growth and sustainable development. The approach is driven by seven engines, namely, Roads, Railways, Airports, Ports, Mass Transport, Waterways, and Logistics Infrastructure. All seven engines will pull forward the economy in unison. These engines are supported by the complementary roles of Energy Transmission, IT Communication, Bulk Water & Sewerage, and Social Infrastructure. Finally, the approach is powered by Clean Energy and Sabka Prayas – the efforts of the Central Government, the state governments, and the private sector together – leading to huge job and entrepreneurial opportunities for all, especially the youth.

Similarly, PM GatiShakti Master Plan for Expressways will be formulated in 2022-23 to facilitate faster movement of people and goods. The National Highways network will be expanded by 25,000 km in 2022-23 and Rs 200 billion will be mobilised through innovative ways of financing to complement the public resources. She added that contracts for implementation of Multimodal Logistics Parks at four locations through PPP mode will be awarded in 2022-23.

In Railways, the Finance Minister said that ‘One Station-One Product’ concept will be popularised to help local businesses & supply chains. Moreover, as a part of Atmanirbhar Bharat, 2,000 km of network will be brought under Kavach, the indigenous world-class technology for safety and capacity augmentation in 2022-23. She also informed that four hundred new-generation Vande Bharat Trains with better energy efficiency and passenger riding experience will be developed and manufactured and one hundred PM GatiShakti Cargo Terminals for multimodal logistics facilities will be set up during the next three years.

The Finance Minister underlined that the Emergency Credit Line Guarantee Scheme (ECLGS) has provided much-needed additional credit to more than 130 lakh MSMEs to help them mitigate the adverse impact of the pandemic. She, however added that the hospitality and related services, especially those by micro and small enterprises, are yet to regain their pre-pandemic level of business and after considering these aspects, the ECLGS will be extended up to March 2023. 

Similarly, Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) scheme will be revamped with required infusion of funds. This will facilitate additional credit of Rs 2 trillion for Micro and Small Enterprises and expand employment opportunities. She informed that Raising and Accelerating MSME Performance (RAMP) programme with outlay of Rs 60 billion over 5 years will be rolled out to make the MSME sector more resilient, competitive and efficient.

Dwelling on the subject of Skill development and Quality Education, the Finance Minister said that Startups will be promoted to facilitate ‘Drone Shakti’ through varied applications and for Drone-As-A-Service (DrAAS). In select ITIs, in all states, the required courses for skilling will be started. In vocational courses, to promote crucial critical thinking skills, to give space for creativity, 750 virtual labs in science and mathematics, and 75 skilling e-labs for simulated learning environment, will be set-up in 2022-23.

On the Defence front, the Government reiterated its committed to reducing imports and promoting AatmaNirbharta in equipment for the Armed Forces. About 68% of the capital procurement budget will be earmarked for domestic industry in 2022-23, up from 58% in 2021-22. Defence R&D will be opened up for industry, startups and academia with 25% of defence R&D budget earmarked.

Referring to Sunrise opportunities, the Finance Minister said, artificial intelligence, geospatial systems and drones, semiconductor and its eco-system, space economy, genomics and pharmaceuticals, green energy, and clean mobility systems have immense potential to assist sustainable development at scale and modernize the country. They provide employment opportunities for youth, and make Indian industry more efficient and competitive.

To facilitate domestic manufacturing for the ambitious goal of 280 GW of installed solar capacity by 2030, an additional allocation of RS 195 billion for Production Linked Incentive (PLI) for manufacture of high efficiency modules, with priority to fully integrated manufacturing units from polysilicon to solar PV modules, will be made.

As a part of the government’s overall market borrowings in 2022-23, sovereign Green Bonds will be issued for mobilizing resources for green infrastructure. The proceeds will be deployed in public sector projects which help in reducing the carbon intensity of the economy.


In the field of electronics, Customs duty rates are being calibrated to provide a graded rate structure to facilitate domestic manufacturing of wearable devices, hearable devices and electronic smart meters. Duty concessions are also being given to parts of transformer of mobile phone chargers and camera lens of mobile camera module and certain other items.

The Finance Minister informed that the Productivity Linked Incentive (PLI) scheme in 14 sectors for achieving the vision of AtmaNirbhar Bharat has received excellent response, with potential to create 60 lakh new jobs, and an additional production of Rs 30 trillion during next 5 years. 

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