‘Centre will ensure capex aid for economic growth’
MUMBAI: The government is committed to ensure that capital expenditure will continue to support the economic growth momentum regained after the third Covid-19 wave, chief economic advisor V Anantha Nageswaran said on Friday.
The government has taken various steps—including lowering taxes, the continuation of privatisation, setting up institutions for sequestering bad loans and managing them and launching an asset monetisation drive— to strengthen the real economy, he added.
“Given the ongoing sense of uncertainty among the private sector participants, both in banking and the non-banking world, the government is committed to making sure that capital expenditure continues (in) such (a way) that growth impulse that we have regained after the third wave is not surrendered,” he said while speaking at a banking event organised by Financial Express.
In the previous fiscal, while the capital expenditure was budgeted at ₹6 lakh crore, the government managed to spend ₹5.92 lakh crore. “And hence, for the current fiscal year, if the government is able to execute the capital expenditure of ₹7.5 lakh crore, then that is the biggest real economic intervention,” he said.
When asked about what other measures should be initiated to help the real economy, Nageswaran said the government will keep its eyes and ears open to respond to whatever the situation arises but all the steps will be well measured.
He said any intervention in the economy has a fiscal component to it, which in turn, will have an impact on interest rates, CAD and currency. “We need to be aware of actions having consequences and whether consequences will complicate the situation or not. So, we need to be careful when we intervene. Are we going to make the situation worse or better?”
Accordingly, every step has to be thought through in terms of the second and third-order effects. So, that is why whatever we do going forward has to be measured and calibrated,” he said.
The CEA further said among all other nations, India is better placed with respect to its midpoints in terms of the inflation outlook. Even on the growth outlook, the country is better than others. He said the fact that the country is now very concerned about a 7% inflation rate is a good sign.