Hope springs anew on a private capex revival1 min read . Updated: 28 Nov 2022, 02:43 PM IST
This year could mark the end of a prolonged slump in private investment, as India’s CEA has indicated. The government will need to tread carefully on what this implies for fiscal policy
If there’s one cog in the wheel of India’s economy that has been missing for much too long, it is private investment. It has remained largely elusive since its heyday in the latter 2000s ended in a deep slump, marked by a spate of bad loans. This held economic growth back, despite a freeing up of space for banks to lend and other efforts by policymakers to get it going. So weak had its revival been that finance minister Nirmala Sitharaman recently expressed her exasperation to industry leaders. “Since 2019, when I took charge of the finance ministry, I have been hearing ‘Industry doesn’t think [that the environment] is conducive’… I want to hear from India Inc, what’s stopping you?" she asked in September. While the wait has been long, this year has finally begun showing signs of a rebound taking shape. On Thursday, chief economic advisor V. Anantha Nageswaran said that our total private sector capital expenditure in the first half of 2022-23 had crossed ₹3 trillion and could hit ₹6 trillion for the full year. This, he added, was a substantial improvement over the past 6-7 years’ record, observing that capacity utilization was nearing levels that had triggered capital investments in the past.
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