Centre’s capex thrust will continue because the private investment remains weak: Former NITI VC Rajiv Kumar

Former Niti Aayog Vice Chairman Rajiv Kumar emphasizes the need for continued focus on capital expenditure in the upcoming Interim Budget to address weak private investment and bridge the infrastructure gap in the Indian economy.

Former Niti Aayog Vice Chairman Rajiv Kumar on January 31 said the Government needs to continue its focus on capital expenditure in the upcoming Interim Budget, as private investment is 'still weak' and there is a need to bridge infrastructure gap, which has been 'plaguing' the Indian economy.

Mr. Kumar noted that increase in capital expenditure during the Modi government period is showing results in terms of the much better quality of the infrastructure and this was needed to make Indian industry globally competitive. He said because of rising indirect tax revenues and also the widening direct tax base, the Finance Minister will be able achieve fiscal consolidation targets.

"The capex thrust will continue because the private investment still remains a bit weak. And also, we need to overcome the infrastructure deficit that has plagued our economy and also the logistics cost, which are very high and can only be covered by rising public capital expenditure" he told PTI in an interview.

According to Mr. Kumar, a significant improvement in the tax-to-GDP ratio and the rising capex will still enable Finance Minister Nirmala Sitharaman to maintain the glide path for fiscal consolidation which was announced last year. "So I think both will be achieved," he said.

According to Mr. Kumar the theme of the upcoming Interim Budget will be continued focused on investment or fiscal consolidation.

Finance Minister Nirmala Sitharaman will present the Interim Budget in the Lok Sabha on February 1. The Government presents an Interim Budget before Lok Sabha elections to meet April-July period expenses. The elections are expected to conducted in April-May 2024.

Going forward, Mr. Kumar said private investment will also pick up and that will then reduce the pressure on the Government to increase its capital expenditure. Ms. Sitharaman in her last year's budget speech, had announced hiking the capital expenditure by 33% to ₹10 lakh crore for infrastructure development for 2023-24.