Pvt sector capex cycle to see revival during 2nd half of current FY: CEA

Asserting that the economic situation is likely to improve during the year, Chief Economic Adviser V Anantha Nageswaran on Tuesday expressed hope that the private sector is expected to accelerate capital expenditure from the second half of the current fiscal.

The investment from private sector has been muted for past many years despite several measures, including corporate tax cut, taken by the government to reinvigorate it.

“Bank credit is beginning to pick up especially in MSME sector. Therefore, I think probably by the end of the second quarter or in the second half of the year, private sector picking up the baton of capital expenditure… sooner rather than later Indian private sector will pick up the capital expenditure baton and run with it,” he said at an event organised by AIMA.

Finance minister Nirmala Sitharaman in the Budget raised capex (capital expenditure) by 35.4 per cent for the financial year 2022-23 to Rs 7.5 lakh crore to continue the public investment-led recovery of the pandemic-battered economy. The capex for the year gone by was pegged at Rs 5.5 lakh crore.

An RBI survey has shown a jump in capacity utilisation by the industry from 68 per cent to 74 per cent, Nageswaran said, adding, the top four firms in several sectors are already operating over 80 per cent capacity.

He said, the government continues to balance short-term compulsion without losing sight of longer term aspiration, macroeconomic stability, prudent budgeting, transparency and emphasis on capital expenditure.

To provide relief to poor, the government has extended free food programme by another six months, which would cost the exchequer about Rs 80,000 crore, 0.65 per cent of GDP.

“The robust state of balance sheet within private sector would enable the Indian economy to weather the current twin storm — geopolitical and Fed Reserve tightening. As we head toward the second half of 2022-23, blue sky will reappear and we can look ahead to a decade of India repeating in a more sustainable form, the kind of high growth we experienced between 2003-2012,” he said.

The major headwinds at the moment are geopolitical situation and aggressive stance of the US Federal Reserve on tightening of monetary policy.

Talking about the focus area, Nageswaran said, asset monetisation and privatisation of PSUs are two key areas.

He also said that the Budget estimates are expected to hold good given the buoyancy in revenue collection.

If the oil prices persist beyond USD 100 per barrel for a longer period, he said, probably GDP numbers may have to be revived downward.

As per the Economic Survey, the country’s economic growth is expected to remain in the range of 8 to 8.5 per cent in 2022-23 as against a projected growth of 9.2 per cent in the previous financial year.

Last week, RBI slashed economic growth projection to 7.2 per cent from 7.8 per cent estimated earlier amid volatile crude oil prices and supply chain disruptions caused by Russia-Ukraine war.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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Asserting that the economic situation is likely to improve during the year, Chief Economic Adviser V Anantha Nageswaran on Tuesday expressed hope that the private sector is expected to accelerate capital expenditure from the second half of the current fiscal.

The investment from private sector has been muted for past many years despite several measures, including corporate tax cut, taken by the government to reinvigorate it.

“Bank credit is beginning to pick up especially in MSME sector. Therefore, I think probably by the end of the second quarter or in the second half of the year, private sector picking up the baton of capital expenditure… sooner rather than later Indian private sector will pick up the capital expenditure baton and run with it,” he said at an event organised by AIMA.

Finance minister Nirmala Sitharaman in the Budget raised capex (capital expenditure) by 35.4 per cent for the financial year 2022-23 to Rs 7.5 lakh crore to continue the public investment-led recovery of the pandemic-battered economy. The capex for the year gone by was pegged at Rs 5.5 lakh crore.

An RBI survey has shown a jump in capacity utilisation by the industry from 68 per cent to 74 per cent, Nageswaran said, adding, the top four firms in several sectors are already operating over 80 per cent capacity.

He said, the government continues to balance short-term compulsion without losing sight of longer term aspiration, macroeconomic stability, prudent budgeting, transparency and emphasis on capital expenditure.

To provide relief to poor, the government has extended free food programme by another six months, which would cost the exchequer about Rs 80,000 crore, 0.65 per cent of GDP.

“The robust state of balance sheet within private sector would enable the Indian economy to weather the current twin storm — geopolitical and Fed Reserve tightening. As we head toward the second half of 2022-23, blue sky will reappear and we can look ahead to a decade of India repeating in a more sustainable form, the kind of high growth we experienced between 2003-2012,” he said.

The major headwinds at the moment are geopolitical situation and aggressive stance of the US Federal Reserve on tightening of monetary policy.

Talking about the focus area, Nageswaran said, asset monetisation and privatisation of PSUs are two key areas.

He also said that the Budget estimates are expected to hold good given the buoyancy in revenue collection.

If the oil prices persist beyond USD 100 per barrel for a longer period, he said, probably GDP numbers may have to be revived downward.

As per the Economic Survey, the country’s economic growth is expected to remain in the range of 8 to 8.5 per cent in 2022-23 as against a projected growth of 9.2 per cent in the previous financial year.

Last week, RBI slashed economic growth projection to 7.2 per cent from 7.8 per cent estimated earlier amid volatile crude oil prices and supply chain disruptions caused by Russia-Ukraine war.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor