Union Finance Minister Nirmala Sitharaman presented the Economic Survey 2024-25, outlining a temporary dip in investment activity while highlighting early signs of recovery in capital formation. The survey underscores the government’s focus on infrastructure spending, strengthened by private investment and increasing manufacturing capacity utilisation.
The report noted an 8.2% rise in the Union government’s capital expenditure between July and November 2024. Furthermore, data from the Reserve Bank of India’s (RBI) OBICUS survey indicated that manufacturing capacity utilisation reached 74.7% in Q2 FY25, surpassing its long-term average of 73.8%.
Infrastructure Spending and Investment Trends
Infrastructure spending experienced a temporary deceleration in Q1 FY25 due to election-related restrictions and inconsistent monsoon patterns. However, ministries managing infrastructure projects had utilised 60% of the allocated capital expenditure by November 2024, a figure aligned with past election years.
To meet long-term growth objectives, India has expanded infrastructure investments significantly, with capital expenditure on critical sectors growing by 38.8% between FY20 and FY24. The National Infrastructure Pipeline (NIP) aims to attract ₹111 lakh crore in investments from FY20 to FY25, covering over 9,766 projects in 37 sub-sectors through the India Investment Grid portal.
The National Monetisation Pipeline (NMP) targets ₹6.0 lakh crore in revenue from FY22 to FY25 by monetising brownfield assets. By FY24, ₹3.86 lakh crore worth of transactions had been completed, primarily in roads, power, coal, and mining sectors. The FY25 target for asset monetisation stands at ₹1.91 lakh crore.
Challenges and Future Prospects
Despite government initiatives, infrastructure investment gaps remain, necessitating greater private sector involvement and innovative financing methods. As India seeks to attract global investors, improving supply chains, securing foreign capital, and enhancing project execution efficiency are critical.
An RBI report showed an increase in investment intentions for FY25 to ₹2.45 lakh crore, compared to ₹1.6 lakh crore in FY24. While some projects may extend into FY26, this indicates sustained investment confidence.
The construction sector has grown 15% beyond pre-pandemic levels, fueled by infrastructure expansion and increasing housing demand. While utilities remain robust, the manufacturing and mining industries continue to lag. A revival in rural demand is supporting consumption, though external trade factors could challenge domestic economic growth.
Role of Financial Institutions
The survey highlights the essential contributions of Rural Financial Institutions (RFIs) and Development Financial Institutions (DFIs) in infrastructure expansion and financial inclusion. Strengthening public-private collaboration will be key to maintaining long-term economic momentum, ensuring the timely execution of infrastructure projects.
With a strong emphasis on capital investment and private sector engagement, the Economic Survey 2024-25 presents an optimistic outlook for India’s economic trajectory, setting the foundation for sustained growth in the coming years.
