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Tuesday, January 31, 2023

India’s public capex may not need to expand at same pace in coming years, says CEA

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India’s public sector capital expenditure will continue, but may not need to expand at the same pace as it has in recent years, the country’s chief economic adviser (CEA) said on Friday.

“What we have now in the corporate sector are very healthy balance sheets, very healthy bottom line, and a financial system that is repaired, ready to lend and the corporate sector is ready to borrow,” V. Anantha Nageswaran said at an event in New Delhi.

Therefore, it may not be necessary or even healthy for public sector to keep expanding capital investment at the same pace, he added.

The government has planned ₹7.5 trillion Indian ($91.30 billion) in capital expenditure this year, the highest on record, to help crowd in private investment. As private firms start to borrow and expand, government may need to keep its own borrowing in check to avoid an increase in overall cost of capital in the economy.

“We’re also ensuring that the combined investment spending by the public and the private sector should not drive up the cost of capital too much for the economy,” Nageswaran said.

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