India's Chief Economic Adviser V Anantha Nageswaran on May 25 said there are signs of Private sector investment cycle unfolding and sectors such assteel and cement have reached a stage where greenfield investment will take place.
"We do see signs of the corporate sector beginning to make investments. There are some new investment announcements," he said at an event organised by Confederation of India Industry. Based on data available for the first 6months of the last three years, he said, it was Rs 2.1 lakh crore in 2020-21, it was Rs 2.7 lakh crore in 2021-22 and Rs 3.3 lakh crore in 2022- 23. "So, it has been rising and once we get the full year data, the picture will be clear. We know that internal resource generation of the companies are at very high level. Therefore, they may not necessarily have to tap either the capital market or the banking channel," he said. Expressing optimism about private sector capital formation cycle in the country, he said,
"we have been waiting for it. It's already unfolding...it is unfolding at steady pace." Capacity utilisation in some sectors like steel and cement has reached a point where greenfield investment have to happen, he added. Observing that energy is an important driver of economic growth, he said, it is energy security that is coming under a lot of pressure thanks to geopolitical developments and climate change. "If there is a single-most important worry in my mind, for sustaining the growth rate that we have been able to achieve in the last 2- 3 years, it is energy security. We cannot completely swear off fossil fuels.
"We do have a target to balance the proportion of non-fossil fuels and fossil fuels in our energy mix in terms of installed capacity by the year 2030... It is equally important we understand that there are important roles for fossil fuels - if not coal, then for gas, etc," he said. And therefore, he said, if the financial industry completely avoids funding fossil fuelbased power generation projects, then economic growth will suffer. The government is focused on ensuring that public sector banks are recapitalised and in good shape to help in their privatisation, Nageswaran said. "We are continuing to maintain the privatisation momentum," Nageswaran said.
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