India’s private sector capital expenditure is seeing improvement and it may touch Rs 6 lakh crore by the end of the current financial year, Chief Economic Advisor V Anantha Nageswaran said on Thursday.
“The total private sector capex is improving. In the first half of this year it has gone to Rs 3 lakh crore. If the pace is maintained, we should be looking at Rs 6 lakh crore (for this year), which is a substantial improvement in any of the past 6-7 years,” Nageswaran said while addressing virtually at the SBI Banking and Economics conclave.
Speaking on growth, he said India’s growth projections for FY2023 made by RBI and international and private sector participants is around 6.5-7 percent and this appears to be reasonable at this point in time.
The National Statistical Office (NSO) will release the GDP data for the second quarter ended September on November 30. In the April-June quarter, the country’s economy grew by 13.5 per cent.
On bank credit, he said the growth has been at 18 per cent and it is not concentrated in one particular area or industry. There is healthy demand for credit which is met by banks.
He said there is a need to be cautious on export outlook in the coming years and concentrate on the internal drivers of demand.
“However, internal drivers of demand are looking constructive and positive, resilient, reinvigorated investment cycle, stable financial system and structural reforms are paving the way for medium term growth to continue,” the chief economic advisor said.
Nageswaran said the current account deficit is going to be between 3-3.2 per cent of GDP in this fiscal.
He said the Indian rupee has been one of the better performers and the country’s import cover is still quite comfortable.
Addressing the same session, Reserve Bank of India deputy governor Michael Patra said one of the challenges faced while deciding monetary policy is the revision in inflation and GDP data, which already come with a lag.
While inflation print is released after a month, GDP number comes with a lag of three months.
“Today, I know of inflation in October and we are just about to start preparations for the December monetary policy. My growth data is for April-June and I will know July-September (GDP data) on November 30. So, on the basis of one-month ago and three-month ago data, I need to try to assess what inflation and growth will be one year from today,” Patra said.
He said the moment the NSO releases data on inflation and GDP, these numbers are subjected to multiple shocks and get revised.
“So, in December, the (CPI) number for October will change and sometimes the change is drastic. If the decision of September (monetary policy) has been based on data which has been changed already, the September decision is questionable,” he said.
“If the NSO office has the right to revise figures, if companies can change the earning numbers, I should be allowed to change the interest rate of September,” Patra said.