The government’s capital expenditure has boosted growth and provided resilience to the Indian economy. Incipient signs of this crowding in private investments are visible. However, till the time private investment becomes more broad-based and entrenched, a process that is being impacted by global uncertainties, government capex will continue to play an important role in boosting growth.
The government may consider increasing its capital expenditure by 20 per cent to Rs 12 trillion. While this will be a moderation in growth from the last two years, it compares well with the 12 per cent growth in the pre-pandemic period (2015-16 to 2019-20).
Further, the quality of capital expenditure must also be a focus, wherein projects that can obtain faster regulatory clearances and offer a higher growth multiplier and rate of return on capital employed are prioritised. Capital expenditure can adopt multi-year budgeting for long-term capital projects with clear and realistic annual targets to help determine the annual allocations more precisely.
Continued reforms are crucial for sustained high growth. The next-generation reforms such as land, labour, power, education, and agriculture are either in the state or concurrent domains, making Centre-state collaboration critical. Therefore, it may be useful to create institutional platforms for building consensus on these reforms.
Today, global value chains are shifting, and India must leverage the manufacturing opportunity that comes with it and build competitiveness. For this, there should be a continued focus on improving ease of doing business by encouraging states to provide all regulatory approvals through the NSWS (National Single Window System), further decriminalising business-facing laws and integrating all compliances related to environment, forest, biodiversity, air and water into one.
In the area of sustainability, India has committed itself to an ambitious goal of achieving net zero by 2070, which requires massive funding. The government could announce the creation of a green transition fund of India, to finance green projects, especially in the private sector including micro, small and medium enterprises. The fund could be set up by the government of India, in partnership with the private sector and a multilateral institution like the World Bank. Further, embracing green hydrogen can be crucial for reducing India’s rising energy import bill. For this, green hydrogen and green ammonia should be covered under the definition of infrastructure sector.
For inclusive development, social infrastructure including education, skill development and health care cannot be ignored. Public expenditure on health and education must be increased and private sector engagement through public-private partnerships must be emphasised. The National Bank for Financing Infrastructure and Development could design appropriate models as part of its development mandate.
On the skilling side, to better align the skills of students with demand, industry inputs should be sought and incorporated in the curriculum, especially in higher education.
Further, digital literacy must remain a top priority and the government must introduce a digital knowledge-based curriculum right from the school up to the college level.
Finally, we must remember that today business, trade and investment are gaining greater strategic dimensions. The government should set up a national economic security board under the National Security Council that could work on various issues impacting India’s economic security.
These measures can not only help India achieve fast, resilient, inclusive and sustainable growth, but also drive global growth and prosperity. The forthcoming interim Union Budget could set the stage for providing further momentum to the Indian economy.
The writer is director general, CII
 "Budget")
