Govt sees revival of private investment in a 'major way'

The robust growth of the capital goods sector in June has led the government to believe that the stage may be set for private investments to come back in a big way.

While Index of Industrial Production (IIP) clocked 7.8 per cent in June, the fastest since February 2008, capital goods grew 11.8 per cent and consumer durables grew by 15.8 per cent — the strongest in several months.

“IIP numbers are very good and robust. What is very crucial within the overall numbers, the capital goods have come in a big way which shows not only it is like short term but the sentiment to bring back private investment is coming back in a major way,” Finance Secretary Ashok Chawla said today after coming out from the board meeting of Reserve Bank of India.

Chawla also said that the government is still “pitching” for the around 7 per cent GDP growth, despite deficient monsoon for the current financial year as projected in the Economic survey.

“The economic survey expects 7 per cent plus minus 0.75 per cent. The range was quite large ... essentially for two reasons. One, what will the monsoon be like. Two, what will be the international economic scenario. We are still pitching within that range, between 6.25-7 per cent, may be more,” he said.

“While on the one hand rainfall was deficient, on the other the manufacturing sector showing substantial growth,” he added.

He, however, said deficient rainfall was a matter of concern and the government would respond by offering sops where it was needed.

“First, the extent of the drought, or the deficit in rainfall, has to be accessed. State governments are doing that. They are going to tell us what their requirements are,” Chawla said, while adding that the central government is prepared to combat the situation.

He also said though Punjab and Haryana, despite deficient rainfall, have been able to complete their sowing operations in line with what they do in normal year by exploiting the ground water.