Former Reserve Bank of India Governor C. Rangarajan on Friday said the package the government is looking at to revive the economy should be partly to raise capital expenditure and look at problems preventing private investments from rising.
"The package, in my opinion, should be partly to raise capital expenditure of the government, but suited in a way in which it will stimulate private investments," he told reporters on the sidelines of the 10th International Gold Summit by Assocham.
He said the fall in growth rate was also accompanied by a fall in investment rate.
"More critically, it is the private investment rate that has fallen. In fact, public expenditure on capital has shown some slight rise. Therefore, the most important thing is to address the problems that may be preventing private investment from rising," Rangarajan said.
He suggested that two things can be done. "There are a number of stalled projects. The low-hanging fruit is to ensure that these stalled projects are activated. Secondly, the banking system needs to be recapitalised so that it can provide additional credit for investment as well."