25% Increase in Central Government's Capital Expenditure to Drive Growth in H2 2024-25: Report
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New Delhi, Dec 1 (NationPress) The capital expenditure by the Central government is anticipated to see a significant 25% increase in the second half of the financial year 2024-2025 when compared to the same period in the previous fiscal year, based on insights from a report by Jefferies.
The analysis highlighted that despite the rise of populist initiatives at the state level, the Centre’s fiscal allocations illustrate a well-rounded strategy aimed at fostering economic growth and generating additional employment opportunities through enhanced investments in major infrastructure projects.
Furthermore, the report predicts an approximate 15% year-on-year growth in overall central government spending during the latter half of 2024-25, which encompasses funding for social welfare programs. This indicates the government's continued commitment to significant infrastructure undertakings to elevate the economic growth rate and facilitate job creation, buoyed by a 25% hike in capital expenditure, the report elaborates.
The report also points out that the rising efficacy of financial assistance programs in state elections, such as Maharashtra's welfare initiative costing Rs 46,000 crore annually (equivalent to 1.1% of the state’s GDP), raises alarms regarding a potential surge in populism.
Notably, 14 out of 28 Indian states have implemented similar schemes, impacting around 120 million households and collectively costing about 0.7-0.8% of India's GDP.
Nonetheless, the Central government's emphasis is on building long-lasting economic assets through infrastructure development, which is essential for enduring growth, according to the report.
The report also anticipates that the Indian stock market will find stability following recent downturns.
"There is a reasonable chance that the Indian stock market is nearing its bottom after a correction predominantly affecting higher-priced mid-cap stocks," the report suggests.
Although foreign investors divested over $12.5 billion in Indian equities in the past two months, substantial purchases by domestic investors have mitigated the outflows, as noted in the report.
October recorded unprecedented inflows into equity mutual funds, even amidst a stock market correction. The report underscores that robust domestic investments are a positive indicator for India's financial markets.
