Finance minister Nirmala Sitharaman on Monday said economic growth will continue to be supported by fiscal spending along with an investment push. This will “impart momentum to the economy based on the idea of growth at macro level complemented by all inclusive welfare at micro level”, she added.
Sitharaman was speaking at a virtual meeting of the finance ministers and central bank governors of the BRICS group.
The statement underscores the government’s continued focus on capex, as it bets big on its high multiplier effect. The Centre has budgeted a capex of Rs 7.50 trillion for FY23, up 27% from the actual spending of Rs 5.93 trillion (including Rs 62,057 crore capital infusion into Air India) in FY22. The finance ministry has already asked various infrastructure ministries to keep spending.
Several agencies have trimmed their projections for India after the Ukraine war triggered a global commodity price rise. They now forecast India’s FY23 growth to remain the range of 7.2% to 8.5%, compared with 8.7% in FY22 (Last fiscal’s growth was aided by a sharply-contracted base).
Several analysts have stressed the need for sustained growth in the Centre’s capital expenditure, especially when private capex is yet to see a broad-based resurgence and there are significant downside risks to growth from elevated oil prices, supply-chain disruptions due to the Ukraine war and a rising interest rate scenario. It will also have to nudge CPSEs to raise their capex. In FY22, CPSEs fell just short of their revised capex target of Rs 5.75 trillion.
BRICS, the minister said, should continue to serve as a platform to facilitate exchange of experiences, concerns and ideas for rebuilding a sustainable and inclusive growth trajectory.
The participants also discussed other legacy finance issues, such as infrastructure investment, New Development Bank (NDB), BRICS Contingent Reserve Arrangement (CRA) etc, the finance ministry said in a statement.