Finance Minister Nirmala Sitharaman sees capital spending fuelling growth

‘States have shown extraordinary absorption capacity for taking the monies and spending on capital assets’

November 30, 2022 08:59 pm | Updated 10:26 pm IST - NEW DELHI

Nirmala Sitharaman

Nirmala Sitharaman | Photo Credit: PTI

India plans to sustain its high growth rate through more government capital spending but will also focus on health and education next year, Finance Minister Nirmala Sitharaman told  the Reuters NEXT conference on Wednesday.

Ms. Sitharaman was speaking amid consultations for the next Budget, which is expected to be announced on February 1. It will be the last full Budget before national elections in 2024.

"We would continue to push capital expenditure, and that I’m saying even as I’m preparing for the next Budget," Ms. Sitharaman said. "We are well on course on meeting this year’s target. The States have shown extraordinary absorption capacity for taking the monies and spending on capital assets."

The government sees the "capital expenditure route as one of those which can guarantee good growth," she said.

Also read |Manufacturing shrinks, slowing Q2 GDP growth to 6.3%

India has budgeted capital spending of ₹7.5 trillion ($92.28 billion) for the current fiscal year, which ends on March 31.

Ms. Sitharaman said that she looked forward to "a very good ... growing Indian economy this year and the next". She was speaking ahead of the publication of July-September growth data, which showed the economy growing 6.3% on an annual basis.

Rupee to stabilise

Ms. Sitharaman said the government was comfortable with the country's current foreign exchange reserves but believed that the rupee would stabilise without much intervention from the central bank.

Inflation, however, was being influenced by external factors for which measures needed to be taken, she said, adding the central bank saw "inflation is in the downward side and it will be well within the tolerance band by early next year or middle of next year".

The private sector is starting to raise investments, she said, which augurs well for the economy that is projected to grow at 7% this fiscal year, despite many other economies suffering because of the Russia-Ukraine war.

"We are fairly comfortable in terms of agricultural supplies and energy, and there is buoyancy as regards to manufacturing," she said.

"Newer areas are growing, sunrise sectors are being supported by the government, so I look forward to a very good, fast-growing Indian economy in this year and the next."

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