New Delhi: The government’s massive capital expenditure program described in a 2022 budget will help crowd-in private investment by reviving economic activities and creating demand, the financial secretary said.
Minister of Finance Nirmala Sitharaman raised capital expenditure (capex) of 35.4 percent for the financial year 2022-23 to Rs 7.5 lakh crore to continue the recovery of public investment income led by the economy of the Pandemi.
This year’s capex was pegged at Crore Rs 5.5 Lakh.
Expenditures for building multimodal logistics parks, Metro systems, highways, and trains are expected to create demand for the private sector because all projects will be carried out through contractors.
In an interview to PTI, Somanda said for the past two years physical restrictions because Covid’s pandemic has a dent demand and delay private investment.
“The hope is because the heavy capital expenditure program at the end of this financial year, hopefully, private capital investment will begin to come in a big way.
That’s our hope,” Somandang said.
The economic survey has set India’s economic growth between 8-8.5 percent in current fiscal, while the budget has expected Nominal GDP growth of 11.1 percent.
In the interaction of the budget post with industry leaders, Minister of Finance Nirmala Sitharaman has advised India Inc.
to take advantage of the announcements made in the budget and “fast” increase expenses.
Said that the government capex increased in the budget with the aim of twins to support sustainable growth and crowd in private investment, the minister asserted that this was the right time for investment and industry should not lose this opportunity.
Explaining the reason for the growth of Conservative Nominal GDP, Somanathan said the weighted average wholesale and retail prices had been taken into account to reach 11-12 percent.
It is hoped that the wholesale price inflation will be lower in the next fiscal, especially because of the high base.
Nominal GDP arrives by adding Deflators to the estimated real economic growth.
“The wholesale prices in the current year have increased much faster than CPI.
Usually next year trends we might see WPI lower than the CPI because of the high basic effects.
In that case the deflator will be 3-4 percent.
We have put nominal GDP in The range 11-12 percent.
We have taken a lower level of conservative (from 8 percent of real GDP growth).
But if the deflator is higher, nominal growth will be higher, “he said.