Parliamentary proceedings: Govt using almost entire borrowings in FY'26 towards capex, says Sitharaman in Lok Sabha

The Government is using almost the entire borrowing in 2025-26 towards financing capital expenditure, Finance Minister Nirmala Sitharaman said on Tuesday (February 11, 2025)

She said the effective capital expenditure in FY'26 is ₹15.48 lakh crore, which is 4.3% of GDP.

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The fiscal deficit target is 4.4% of the GDP for next fiscal.

"It indicates that the government is using almost the entire borrowed resources for financing effective capital expenditure. So the borrowings are not going for revenue expenditure or committed expenditure, or any of those kinds.

“It's going only for creating capital assets. So, in effect, the government intends to use about 99% of borrowed sources to finance effective capital expenditure in the upcoming year," she said in the Lok Sabha.

Replying to a discussion on General Budget 2025-26, Ms. Sitharaman said the Budget has come in a time of immense uncertainties, changes in the global macro-economic environment, stagnating global growth and sticky inflation.

The world's scenario in the last 10 years turned 180 degrees, and making Budget is more challenging now than ever before, she said, adding Budget balances national development necessities with fiscal priorities. Ms. Sitharaman said inflation trend, particularly food, appears to be moderating.

"Inflation management receives the highest priority of this government. Overall, retail inflation is within the notified tolerance band of 2-6%," Ms. Sitharaman said.

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On the weakening of rupee against U.S. dollar, the Minister said various global and domestic factors are influencing the value of rupee against the U.S. dollar.

The Indian rupee has depreciated 3.3% against the U.S. dollar between October 2024 and January 2025, but the decline has been lower than that in some of its Asian peers.

South Korean Won and Indonesian Rupiah depreciated by 8.1 per cent and 6.9 per cent, respectively in this period.

Further, all G-10 currencies also depreciated during this period by more than 6 per cent with Euro and British Pound depreciating by 6.7% and 7.2%, respectively.

Ms. Sitharaman also said there has been no cut in transfer to states and ₹25.01 lakh crore will be transferred in FY'26.