Public capital expenditure may not need to expand at same pace in coming years, says CEA

The government has planned Rs 7.5 trillion ($91.30 billion) in capital expenditure this year, the highest on record, to help crowd in private investment.

Indian currency of different denominations are seen in this picture illustration taken in Mumbai | Reuters/Vivek Prakash/Files

New Delhi: India’s public sector capital expenditure will continue, but may not need to expand at the same pace as it has in recent years, the country’s chief economic adviser (CEA) said on Friday.

“What we have now in the corporate sector are very healthy balance sheets, very healthy bottom line, and a financial system that is repaired, ready to lend and the corporate sector is ready to borrow,” V. Anantha Nageswaran said at an event in New Delhi.

Therefore, it may not be necessary or even healthy for public sector to keep expanding capital investment at the same pace, he added.

The government has planned 7.5 trillion Indian rupees ($91.30 billion) in capital expenditure this year, the highest on record, to help crowd in private investment. As private firms start to borrow and expand, government may need to keep its own borrowing in check to avoid an increase in overall cost of capital in the economy.

“We’re also ensuring that the combined investment spending by the public and the private sector should not drive up the cost of capital too much for the economy,” Nageswaran said.

($1 = 82.1490 Indian rupees)

(Reporting by Nikunj Ohri and Shivangi Acharya; Editing by Krishna N. Das and Dhanya Ann Thoppil)

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