An infrastructure gap is “plaguing” the Indian economy and there is a need to fill this gap, Former NITI Aayog Vice Chairman Rajiv Kumar said ahead of tomorrow’s Interim Budget presentation by Finance Minister Niramala Sitharaman, as per a PTI report. Kumar added that the government will need to continue focusing on capital expenditure in the budget as the investment from private firms is “still weak”.
Capex by govt pushing infrastructure
Kumar highlighted that the capital expenditure during the present government’s tenure has yielded results and produced much better quality of infrastructure, which was needed to make the Indian industry globally competitive.
“The capex thrust will continue because the private investment still remains a bit weak. And also, we need to overcome the infrastructure deficit that has plagued our economy and also the logistics cost, which are very high and can only be covered by rising public capital expenditure” Kumar told PTI.
He mentioned that due to the increasing indirect tax revenues and the expansion of the direct tax base, the finance minister is poised to meet the fiscal consolidation targets as well. He explained that given the prominent improvement in the tax-to-GDP ratio, the rising capex will still lead Sitharaman to meet fiscal consolidation which was announced last year.
The theme of the interim budget will be continued focus on investment and fiscal consolidation.
Kumar on private investment
As per Kumar, the private investment will be picking up and eventually cut the pressure on the government to increase its capital expenditure.
Last year, Sitharaman had announced increasing capital expenditure by 33% to Rs 10 lakh crore for infrastructure development. Regarding the present macroeconomic scenario in India, Kumar stated that owing to the government’s emphasis on domestic capital expenditure and the prevailing domestic demand, the nation’s economy is anticipated to sustain a growth rate of approximately 7 percent even in the fiscal year 2024-25.