Step up spending, India Inc tells govt

Urges govt to form infrastructure fund

Ahead of the Budget, Industry body CII urged the government to step up investment and activate National Investment and Infrastructure Fund (NIIF) to provide more avenues for infrastructure financing.

Ficci said the government must adhere to the fiscal consolidation roadmap but not at the cost of productive expenditure.

“Considering that broad based revival of private investment is being constrained on account of weak order book situation resulting in capacity overhang, there are hopes and expectations that the forthcoming Budget would increase spending by the government, the public sector and by quasi-government bodies,” CII Director General Chandrajit Banerjee said. According to CII, higher public investment in key projects, especially in infrastructure sectors such as roads, railways, power and waterways would ‘crowd in’ private investment and in turn have a cascading effect on growth.

Fiscal target

Ficci, quoting economists, said the government should continue to undertake productive investments even if that means a minor slippage in the fiscal target.

“Enhanced spending on physical and social infrastructure would have significant backward and forward linkages producing a multiplier effect through various sectors and manifesting in higher overall growth,” it said.

The government should continue trimming the revenue expenditure and focus on raising divestment proceeds and further rationalise subsidies. This would aid the fiscal consolidation process.

‘Indian economy to grow at 7.4 %’

The Indian economy is expected to grow at 7.4 per cent in the current fiscal, slightly lower than 7.6 per cent projected in advance estimates of Central Statistics Office, Ficci said.  “The results of latest round of Ficci’s Economic Outlook Survey put across a median GDP growth forecast of 7.4 per cent for the current fiscal year,” it said. The CSO had estimated that Indian economy is expected to record a five-year high growth rate of 7.6 per cent in 2015-16.