The volatility in global crude oil prices due to the war in Europe, as well as the US Federal Reserve's (Fed) predicted tapering and hike in interest rates, are two big headwinds facing the Indian economy, according to Chief Economic Advisor (CEA) V Anantha Nageswaran.
Nageswaran said he expects a rebound in private-sector capital expenditure (capex) plans in the second half (H2) of 2022-23, speaking at an event organised by the All India Management Association (FY23). "Bank lending is starting to increase up, particularly among micro, small, and medium-sized businesses." "I believe the private sector will take up the capex baton and run with it towards the end of the second quarter or in H2," he said.
Since the pandemic brought the Indian economy to a halt in April-June 2020, the government has prioritised infrastructure building as a key component of the country's economic recovery. In reality, the Centre's capex outlay increased significantly in 2020-21, 2021-22, and FY23 goals, despite the private sector's inability to scale up its investment plans.
Finance Minister Nirmala Sitharaman has set a capex target of Rs 7.5 trillion for FY23, with Rs 1 trillion going to states in the form of long-term, interest-free loans to meet their capital demands.
"The economy will be able to weather the twin storms of geopolitics and Fed tightening thanks to the strong health of private-sector balance sheets." "As we enter H2FY23, blue skies will emerge, and we can look forward to a decade of India repeating the kind of high growth we saw between 2003 and 2012 in a more sustainable form," he said.
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