The government’s sizable investment program, as set out in the 2022-23 budget, will help attract private investment by reviving economic activity and creating demand, Finance Minister TV Somanathan said.
Finance Minister Nirmala Sitharaman increased capital expenditure (capex) by 35.4 percent for the fiscal year 2022-23 to Rs 7.5 lakh crore to continue the government investment-led recovery of the pandemic-ravaged economy. The capex this year is pegged at Rs 5.5 lakh crore.
Spending on building multimodal logistics parks, metro systems, highways and trains is expected to create demand for the private sector as all projects must be executed through contractors.
Mr Somanathan said physical constraints due to the Covid pandemic over the past two years have affected demand and slowed private investment.
“The hope is that hopefully, because of the heavy capital spending program towards the end of this fiscal year, large-scale private capital investment will begin. That is our hope,” said the finance minister.
Low private investment is a non-economic problem, which cannot be solved with economic remedies, he said, adding that it would be solved when operations start and demand increases.
The economic survey estimates India’s economic growth in the current fiscal year to be between 8 and 8.5 percent, while Budget has estimated nominal GDP growth of 11.1 percent.
In her post-budget interaction with industry leaders, Finance Minister Nirmala Sitharaman on Saturday urged India Inc to take advantage of announcements in Budget and “quickly” ramp up spending.
The minister stated that now is the right time for investment and that the industry should not miss this opportunity.