Capital spending by the government is crucial to closing the infrastructure deficit since private investment is still very low: Rajeev Kumar, the former VC of NITI

Capital spending by the government is crucial to closing the infrastructure deficit since private investment is still very low: Rajeev Kumar, the former VC of NITI

Capital spending by the government is crucial to closing the infrastructure deficit since private investment is still very low: Rajeev Kumar, the former VC of NITI

According to Rajeev Kumar, the Modi government's rise in capital investment has improved the quality of the infrastructure and is necessary to make Indian business competitive on a global scale.

Rajeev Kumar, the former vice-chairman of Niti Aayog, said on Wednesday that the government must maintain its emphasis on capital spending in the next interim Budget since private investment is "still weak" and the infrastructure deficit must be filled, which has been "painful." Indian economy.

According to Kumar, the Modi government's increased capital expenditures have improved the quality of the infrastructure and are necessary to make Indian business competitive on a global scale.

According to him, the Finance Minister will also meet budget consolidation goals since the direct tax base is growing and indirect tax receipts are increasing.

The focus on capital expenditures will not change since private investment is still not very strong. Additionally, we must address the high costs of logistics and the infrastructure deficit that has hurt our economy, both of which can only be addressed by raising public money."Expenses," he said in an interview with PTI.

According to Kumar, the finance minister will still be able to follow the smooth road to fiscal consolidation that was stated last year despite increased capital expenditures due to the tax-to-GDP ratio's notable improvement.

So I believe we can do both.Be seized," he said.

As per Kumar's statement, the next interim budget would center on either fiscal consolidation or investment.

The interim budget will be presented by Finance Minister Nirmala Sitharaman in the Lok Sabha on February 1. The government presents the interim budget to cover the costs for the April–July period before to the Lok Sabha elections.

According to Kumar, as private investment grows in the future, the government won't be under as much pressure to raise capital spending.

Sitharaman had promised a 33% increase in capital investment for infrastructure development to Rs 10 lakh crore for 2023–24 in her budget address from the previous year.

"We should stick within the target as well as that will require the finance minister to resurrect the asset monetization program as well as the public sector enterprise privatization program, which at first will not happen in this budget due to the fact that is only an interim budget," Kumar said in response to a question about the government's medium-term fiscal deficit target. In her most recent budget, Sitharaman declared a reduced fiscal deficit goal for FY24 of 5.9%.

Kumar claims that those two categories would get special attention when the July budget is unveiled as it is the only way for the government to lower the ratio of public debt to GDP.

"And once this comes down, the deficit in the budget target can be achieved but the fiscal consolidation target can also be reached," he said.

Regarding India's present macroeconomic conditions, Kumar predicted that the nation's GDP would continue to expand at a rate of about 7% in 2024–2025 as a result of domestic demand and capital expenditures made by the government.

The Indian economy is expected to expand at a rate of 7.3 percent in 2023–24, up from 7.2 percent in the previous fiscal year, according to the most recent official statistics.

In response to a query on the nation's young unemployment rate, Kumar said that a lot of people have noted that development is not producing a sufficient amount of jobs.

He continued, saying, "And this is also reflected in the fairly weak consumption requirements that we have seen because GDP growth is about 7% while consumption growth for demand is less than 5%." This, he said, now signals weak domestic growing disparity in spending, demand, as well as the economy.