Government To Increase Capital Spending To Boost Growth: Finance Minister

Speaking to Reuters, Finance Minister Nirmala Sitharaman forecast a ‘very good’ economy despite second quarter growth slowing down compared to the previous year.

Government To Increase Capital Spending To Boost Growth: Finance Minister
Nirmala Sitharaman at High Level Seminar, Strengthening Global Collaboration for Tackling Food and Insecurity, during the G20 Finance Ministers and Central Bank Governors Meeting in Nusa Dua, Bali, Indonesia, July 15, 2022. Sonny Tumbelaka/Pool via REUTERS.

INDIA plans to use government capital spending to sustain strong economic growth, finance minister Nirmala Sitharaman spoke at a conference on Wednesday, forecasting a "very good" economy ahead of 2024 national elections.

The government will also place a priority on health and education, said Sitharaman, who is preparing the national budget due on February 1, the last full budget before the elections.

"We would continue to push capital expenditure, and that I’m saying even as I’m preparing for the next budget," Sitharaman told the conference. Capital expenditure, she said, "can guarantee good growth."

As a result, India can look forward to "a very good …  growing Indian economy this year and the next," she said.

Compared to the pervious fiscal year, India's capital spending budget is already 27 per cent.

However, economists from various agencies have warned that growth momentum may ease in the coming months due to higher interest rates and slowing exports.

Sitharaman stressed that economic reforms will continue despite the elections.

Imports from Russia

Higher oil imports from Russia are helping the Indian economy and boosting consumer sentiment as cheaper energy costs partly offset rises in prices elsewhere, Sitharaman told the conference.

Indian imports from Russia totalled $29 billion between February 24 and November 20 – an almost fivefold increase on the $6 billion in the same period a year ago, according to a Reuters source.

Rupee to stabilise

The government is comfortable with the country's current foreign exchange reserves but believes that the rupee will stabilise without much intervention from the central bank.

The rupee fell below 83 against the dollar earlier in the year, before recovering in the last few weeks on the back of signals of a slower monetary tightening from the United States. On Wednesday, the rupee finished the session at 81.4.

Finance Minster Nirmala Sitharaman was speaking at a Reuters conference.

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