Under no circumstances, the Survey said, its impetus on government investment means that it is a substitute to private sector investment but the two need to complement each other.
The Economic Survey tabled in the Indian Parliament on Friday made it clear that public investment will hold the key for boosting growth -- at least in the near term.
Blaming the UPA and UPA II governments for scuttling growth, the Survey said that Indian private sector investment climate has been clouded by the experience of the last decade. It said that private sector investment remains the main driver of growth engine in the long-term but in the medium and near-term the government has to step up spending.
It said, "India can balance the short-term imperative of boosting public investment to revitalize growth with the need to maintain fiscal discipline."
The government stressed that to meet the revenue and fiscal deficit targets it is important to exercise expenditure control. However, at the same time, the expenditure must be moved from consumption. i.e. subsidies, to investment. The Survey said, " Broadly speaking, the additional space opened up, including through a reduction in subsidies and higher disinvestment proceeds, should be occupied by public investment."
Under no circumstances, the Survey said, its impetus on government investment means that it is a substitute to private sector investment but the two need to complement each other.
The Survey said that India needs to tread the path of investment-driven growth but the private sector cannot be expected to rise to the occasion because of its highly leveraged balance-sheet. Therefore, public investment is needed to kickstart investment and boost growth.
It cautioned, "But, the call for public investment is not a counsel of despair for private investments going forward, especially the public-private partnership model."
The Survey said that the Union Budge to be announced by Arun Jaitley tomorrow will focus on subsidy reductions and finding ways to make sure they reach the poor better. If India needs to reach the fiscal deficit target of 3% in the near term, the public investment must increase and subsidies must come down. "To do this, concrete actions will be needed in this budget to control expenditure via subsidy reductions, improve its quality in altering the mix between public consumption and investment in favour of the latter, and move India toward the golden rule of borrowing only for public investment."
The Survey stressed on the increased role of Indian Railways in boosting public investments. It said, "Greater public investment in the railways would boost aggregate growth and the competitiveness of Indian manufacturing substantially."
Public investment, especially by Indian Railways will play a catalytic role till the time issues plaguing private investment don't get solved, it said.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}