Union Budget 2025 | Government looks to revive PPP model to spur private investment

Growth FY26 capex target set at Rs 11.2 lakh crore

New Delhi: Spending on big-ticket, high-multiplier infrastructure projects has been the Narendra Modi government’s chosen path to boost economic growth since the Covid-19 pandemic.

For 2025-26, the budget estimate (BE) for capital expenditure — spending for new infrastructure — is Rs 11.2 lakh crore, compared with the 2024-25 revised estimate (RE) of Rs 10.2 lakh crore. The BE for FY25 was Rs 11.1 lakh crore.

This means that the Central government has underspent on capex this year, and next year’s target is almost the same as the amount originally envisaged for the current year.

The capex amount includes Rs 1.5 lakh crore in long-term interest-free loans to states for their capital expenditure needs.

Additionally, the Central government is aiming to revive public-private partnerships (PPPs).

“Each infrastructure-related ministry will come up with a three-year pipeline of projects that can be implemented in PPP mode. States will also be encouraged to do so, and can seek support from the India Infrastructure Project Development Fund scheme to prepare PPP proposals,” said Finance Minister Nirmala Sitharaman in her speech.

“Increased focus in the Budget through the public-private partnership mode of project implementation will bring in private investment. This will continue to provide confidence to the private sector, where investment is a bit sluggish,” said economists at the Bank of Baroda in a post-Budget research report.

The Finance Minister also announced a new asset monetisation plan for 2025 to 2030 to plough back capital of Rs 10 lakh crore in new projects.

Regulatory and fiscal measures will be finetuned to support the plan, wherein assets will continue to be owned by the government, but leased and operated by the private sector.

The Central government will also set up an Urban Challenge Fund of Rs 1 lakh crore for the creative development of cities to serve as growth hubs.

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Union Budget 2025 | Nirmala Sitharaman, as Finance Minister, presented her record 8th Union Budget this time. While inflation has burnt a hole in the pockets of 'aam janata', the Modi govt gave income tax relief for those making up to Rs 12 lakh per year in salaried income. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.