Government must step up spending: TV Narendran
NEW DELHI: Government spending on infrastructure should continue until private investment comes back to the levels seen in the past, Tata Steel chief executive officer T V Narendran said on Thursday in the run-up to next month’s Union budget.
Narendran, who is also president of the Confederation of Indian Industry (CII), said the fact that businesses are using 70-80% of production capacities and planning new investments should not stop the government from continuing to spend.
Narendran’s appeal comes at a time the centre is preparing the union budget for FY23 in the backdrop of buoyant revenue collections and the fiscal deficit position staying well under control. Fiscal deficit of the central government in April-november period is 46% of the ₹15 lakh crore budget estimate for FY22.
In a virtual interview with Mint on Wednesday, Narendran said the policy response to the third wave of the coronavirus pandemic needs to be well coordinated between the centre and states as well as government and industry, as unprepared lockdowns could cripple supply chains and consumption.
According to Narendran, the need of the hour is policy stability and continued government investments in infrastructure. Private sector investment will follow, he said.
Narendran said a CII survey in December showed that most businesses were at 70% to 80% capacity utilisation and were positive about the future. Most businesses felt that they were at pre-pandemic levels or better, were exporting more, that capacity utilisation and profitability were good and they were planning investments.
“It is already evident in some sectors like metals for instance. But at the same time, we urge the government to continue to spend on infrastructure. Government expenditure should not get cut down as private sector investment will need more time to come back to the levels that we have seen in the past though it is already better than what it was two years ago,” Narendran said. He pointed to improving demand, profitability and healthier balance sheets as favourable factors for impending investments. Infrastructure, he said, drives demand and cost competitiveness.
“There must be a coordinated response so that we find that balance of making sure lives are not impacted and at the same time livelihoods are also not impacted,” he said.