FM: Govt to support growth through capex until pvt investment picks up, Pg13

Key Highlights:

• The government will continue supporting growth through capital expenditure until private sector investment picks up, Finance Minister Nirmala Sitharaman said.
• She was speaking at HSBC's Algorithm of Inclusion event in Mumbai on Monday.
• She said the government accords top priority to fiscal prudence while being "creative" in balancing spending with growth.
• The FY27 Union Budget pegged capital expenditure at Rs 12.22 lakh crore, up 11.5% over the FY26 revised estimate of Rs 10.96 lakh crore.
• She pointed to the latest GST collection numbers as evidence that the economy remains robust.

Detailed Insights:

• Public capex has been the government's main growth lever since the pandemic, aimed at crowding in private investment.
• The Finance Minister said there are no shortages despite global challenges, adding that "banks are fine, economy is robust."
• She also said "insurance for all by 2047" is a government goal, linking it to financial inclusion.
• Private capex has remained uneven despite incentives such as the Production Linked Incentive scheme, keeping public investment central to growth.
• Sustained capex is also a bet on the infrastructure multiplier, which raises productivity and future growth potential.

Key Concepts Involved:

• Capital expenditure: Government spending that creates assets such as roads, railways and ports, unlike revenue expenditure.
• Crowding in: When public investment encourages private investment by improving infrastructure and demand.
• Fiscal prudence: Keeping deficits and debt within sustainable limits while managing spending priorities.
• Revised estimate: The updated figure for a budget year's spending or receipts presented in the following Budget.