Private sector capex likely at Rs 6 trn in FY23: CEA V Anantha Nageswaran | The Financial Express

Private sector capex likely at Rs 6 trn in FY23: CEA V Anantha Nageswaran

Nageswaran also said higher capex will raise household incomes and in turn consumption.

Private sector capex likely at Rs 6 trn in FY23: CEA V Anantha Nageswaran
The Union government has budgeted Rs 7.5 trillion for capital expenditure in FY23.

Chief economic adviser (CEA) V Anantha Nageswaran on Thursday said that India’s private sector capital expenditure is expected at `6 trillion in the current financial year, which is a substantial improvement compared to the private capex in the past six to seven years. The private sector capex has crossed Rs 3 trillion in the first half of FY23, he said.

The corporate sector has seen a reduction in its leverage ratio, which indicates balance sheets are capable of expanding again based on corporate profitability, he said, adding that the capacity utilisation is also reaching the levels which will trigger capex.

The Union government has budgeted Rs 7.5 trillion for capital expenditure in FY23.

“The private sector, motivated by reasonable tax rates, will definitely have to invest, as private sector investment leads to employment generation,” Nageswaran said at the 9th SBI Banking & Economics Conclave.

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Nageswaran also said higher capex will raise household incomes and in turn consumption.

The higher consumption will not necessarily come in the way of banks’ profitability, because volume growth is pretty strong and interest rates for lenders are not very constrictive.

“We may be entering a fairly comfortable Goldilocks zone in terms of the interest rates charged to borrowers and rates paid on deposits. So credit growth momentum is holding up quite well,” Nageswaran said.

The recovery from the pandemic has been quite satisfactory due to the gradual, cautious and targeted interventions by the government and the Reserve Bank of India during the pandemic; these have paved the way for consistency in macro variables, he said.

The current account deficit is seen in the range of 3-3-2% of the gross domestic product, mainly due to increase in the economic activity and the prices of crude oil rising earlier this year, he said. However, the Indian rupee has fared comparatively better compared to its counterparts in the emerging economies, he added.

On exports, Nageswaran said that India needs to be cautious on the outlook on account of the geopolitical and inflation situation in the developed countries.

In the coming years, India needs to concentrate on the internal drivers of demand as medium-term growth is looking positive and resilient, led by reinvigorated investment cycle, stable financial system and structural reforms, Nageswaran said.

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First published on: 25-11-2022 at 05:15 IST