Budget 2025 FM Exclusive: Capex Still Primary Growth Engine, Consumption Push An Addition, Says Sitharaman

Even as the Union Budget 2025 sparks enthusiasm around consumption, Finance Minister Nirmala Sitharaman has made it clear—capital expenditure remains one of India's primary growth driver, and the rising focus on consumption is an addition, not a pivot.

"We have not moved away from capex. Consumption is just an addition," Sitharaman told NDTV Profit in an exclusive interview, dismissing speculation that Budget 2025 prioritises consumption over investment.

The government has increased capex spending by 10% this year to Rs 11.21 lakh crore, up from Rs 11.11 lakh crore in the previous year. Sitharaman pointed out that India's capex growth has been so strong over the years that even a 10.23% increase now feels ‘normal’.

With capex accounting for 4.3% of the gross domestic product, Sitharaman said that borrowings are being responsibly used for infrastructure development.

"Our fiscal deficit for next year is predicted at 4.4%, and borrowings are going directly into improving capex," she said.

While infrastructure spending remains a priority, Sitharaman highlighted that the government is diversifying investments into future-focused sectors like:

• AI research and private sector R&D

• MSME support and shipbuilding

• Education, healthcare, and nutrition programs

"We are strengthening the foundations of 'Viksit Bharat' by investing in children's education, AI training for youth, and MSME growth," she stated.

Sitharaman made it clear that India's economic model remains investment-led, with consumption playing a supporting role. "We must move forward without burdening our limited resources," she said.

Finance Minister Nirmala Sitharaman had presented her eighth Union Budget on Feb. 1st, with income tax rebates being the most talked-about announcement.

Beyond tax reforms, the budget included schemes to bolster the MSME sector, programs for women's welfare and development, and initiatives for farmers like the PM Dhan Dhanya Krishi Yojana to improve agricultural productivity.

The budget also outlined plans to upgrade education infrastructure, boost exports, and strengthen India's position in global trade.