New Delhi, March 27 -- On 1 February 2025, India's finance minister Nirmala Sitharaman presented her record eighth budget in Parliament. Her budgets have usually been characterized by three signature features: transparency, fiscal prudence and high capital expenditure (capex). However, in the 2024-25 and 2025-26 budgets, there is a visible tension between the latter two. Capex growth has been drastically cut to meet the committed fiscal consolidation targets.

Earlier, high capex could be combined with fiscal consolidation-reduction of the fiscal deficit (FD)-by cutting down on revenue (or current) expenditure. With revenue expenditure growth already pared to a minimum in earlier budgets, the FD reduction target could only be met by also ...