Investments by the private sector are showing signs of picking up, said Chief Economic Adviser, V Anantha Nageswaran, on Thursday 25 May.
“We do see signs of the corporate sector beginning to make investments. There are some new investment announcements,” he said at an event organised by the CII. Based on data available for the first six months of the last three years, he said it was ₹2.1-lakh crore in 2020-21, ₹2.7-lakh crore in 2021-22, and ₹3.3-lakh crore in 2022-23.
Expressing optimism about the private sector’s capital formation cycle in the country, he said: “We have been waiting for it. It’s already unfolding. It is unfolding at steady pace.” Capacity utilisation in some sectors like steel and cement has reached a point where greenfield investment have to happen,” he added.
Observing that energy is an important driver of economic growth, he said it is energy security that is coming under a lot of pressure, thanks to geopolitical developments and climate change. “If there is a single-most important worry in my mind, for sustaining the growth rate that we have been able to achieve in the last 2-3 years, it is energy security. We cannot completely swear off fossil fuels,” he said.
The government has a target to balance the proportion of non-fossil fuels and fossil fuels in our energy mix, in terms of installed capacity, by 2030. It is equally important we understand that there are important roles for fossil fuels — if not coal, then for gas,” he said.
And, therefore, he said if the financial industry completely avoids funding fossil fuel-based power generation projects, then economic growth will suffer. “And if we place economic growth in jeopardy, then the generation of fiscal and private sector resources will also be in jeopardy and, therefore, our ability to provide the right mind of financing for dealing with climate change will also be in doubt,” he said.