CII's Capex Call: 12% Hike for Growth
The Confederation of Indian Industry (CII) has urged the government to increase public capital expenditure by 12% for the Centre and 10% for states in the upcoming budget. This strategic push aims to sustain India's economic growth momentum and crowd in private investment [4, 5, 11].
Key Recommendations at a Glance
Capex Multiplier Calculator
Understand the economic impact of capital expenditure. Enter an investment amount to see its estimated short-term effect on the GDP, based on the multiplier effect.
Deep Dive: CII's Investment-Led Growth Strategy
Public capital expenditure (capex) is considered a key driver of economic growth because it has a high multiplier effect. Every rupee spent by the government on creating assets like roads, ports, and power plants boosts GDP by an estimated ₹2.45 in the short term and up to ₹4.8 in the long term [10]. This spending crowds in private investment, creates jobs, and improves logistical efficiency, laying the foundation for sustained long-term growth [9, 12].
CII recommends focusing the increased expenditure on high-multiplier sectors. The goal is to maximize the economic impact of every rupee spent. Key areas identified include [8, 12]:
- Transport & Logistics: Roads, railways, and ports to reduce supply chain costs.
- Energy Sector: Strengthening the power grid and transmission lines.
- Green Transition: Investments in renewable energy and sustainable infrastructure.
- Digital Infrastructure: Expanding India's high-speed data network.
CII's strategy is not just about public spending; it's about creating a virtuous cycle. Better infrastructure created by public capex makes it more attractive for private companies to invest. To further boost this, CII has proposed several measures [8, 11]:
- Tax Incentives: Offering tax credits for new private investments and production milestones.
- NRI Investment Fund: Creating a special fund to channel investments from NRIs and foreign institutions into key sectors like infrastructure and AI.
- Easier ECB Norms: Simplifying rules for External Commercial Borrowings to improve access to global capital for manufacturing and infrastructure projects.
The National Infrastructure Pipeline (NIP) is a government initiative to map out and fund infrastructure projects across the country. CII has proposed launching "NIP 2.0" with an outlay of ₹150 lakh crore for the period 2026-2032 [5, 8]. This new pipeline would provide a clear, multi-year roadmap of projects, including those ready for Public-Private Partnership (PPP), giving long-term certainty to investors, developers, and state governments [11].
PYQs: Capex, Budgets & Growth (For Aspirants)
Prompt: "Discuss the significance of public capital expenditure as a tool for economic revival and sustaining growth momentum in the Indian context. How does it 'crowd in' private investment?"
Answer Structure:
- Define Capital Expenditure vs. Revenue Expenditure.
- Explain the concept of the fiscal multiplier, citing estimates (e.g., 2.45x) [10].
- Describe the "crowding-in" effect: how public infrastructure reduces costs and boosts demand, encouraging private firms to invest.
- Use examples from the National Infrastructure Pipeline (NIP) [8].
- Conclude on the importance of capex quality and efficiency, not just quantity.
Prompt: "Analyze the role of central government support in boosting capital expenditure by states. Why is state-level capex critical for balanced regional development?"
Answer Structure:
- Explain schemes like "Special Assistance to States for Capital Investment."
- Discuss the recommendation for a 10% hike in state capex support [4, 5].
- Argue that states are often responsible for last-mile infrastructure (local roads, water, health), making their capex vital.
- Link state-level capex to reducing regional disparities and improving socio-economic indicators.
Sources & Attribution
Data Sources (December 2025):
- Pre-Budget 2026-27 recommendations by the Confederation of Indian Industry (CII) [4, 5, 8, 11, 12].
- Economic Times, The Hindu BusinessLine, Deccan Herald for news reports [4, 8, 12].
- National Institute of Public Finance and Policy (NIPFP) study on fiscal multipliers [10].
Disclaimer: This content is for educational purposes. All data is based on news reports and public recommendations as of December 16, 2025.
