India’s public sector capital spending will continue, but may not need to increase at the same pace as it has in recent years, the chief economic adviser (CEA) of the country.
“What we have now in the corporate sector are very healthy balance sheets, very healthy earnings and a financial system that is fixed, ready to lend and the corporate sector is ready to borrow,” V. Anantha said. Nageswaran at an event in New Delhi.
Therefore, it may not be necessary or even healthy for the public sector to keep capital investment expanding at the same pace, he added.
The government has planned ₹7.5 trillion ($91.30 billion) in capital expenditure this year, the highest on record, to help attract private investment. As private companies begin to borrow and grow, the government may need to control its own borrowing to avoid an increase in the overall cost of capital in the economy.
“We are also ensuring that the combined capital expenditures of the public and private sectors do not raise the cost of capital to the economy too much,” Nageswaran said.