Why Budget 2025 Should Focus On Restoring India's Capex Growth Momentum

The government may boost infrastructure spending in Budget 2025 to counter slowing growth.

In brief

• India's real GDP growth is revised down to 6.4%, on account of lower growth in capital and investment expenditure.
• Budget 2025 should focus on reviving domestic demand, boosting private consumption, and increasing capital expenditure by at least 20%.
• EY India estimates FY25 fiscal deficit at 4.8% of GDP, marginally lower than the budget estimates due to capital expenditure growth falling well short of the budgeted target.
• EY India projects FY26 fiscal deficit at 4.4% of GDP.

The 2Q FY25 real Gross Domestic Product (GDP) growth data at 5.4% released on 29 November 2024 by the National Statistics Office (NSO) came as a surprise to many. It led to a downward revision of India's GDP growth forecast for FY25 by most multilateral organizations and rating agencies. The IMF, in its January 2025 update of World Economic Outlook, projected India's real