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Chief Economic Advisor (CEA) V Anantha Nageswaran has said that the government is committed to ensuring that capital expenditure (Capex) will continue to support the economic growth momentum regained after the third COVID-19 wave. The government has taken various steps -- including lowering taxes, the continuation of privatization, setting up institutions for sequestering bad loans and managing them, and launching an asset monetization drive -- to strengthen the real economy.

CEA said ‘given the ongoing sense of uncertainty among the private sector participants, both in banking and the non-banking world, the government is committed to making sure that capital expenditure continues (in) such (a way) that growth impulse that we have regained after the third wave is not surrendered.’ He stated that in the previous fiscal, while the capital expenditure was budgeted at Rs 6 lakh crore, the government managed to spend Rs 5.92 lakh crore and hence, for the current financial year, if the government is able to execute the capital expenditure of Rs 7.5 lakh crore, then that is the biggest real economic intervention.

Talking about what other measures should be initiated to help the real economy, Nageswaran said the government will keep its eyes and ears open to respond to whatever the situation arises but all the steps will be well measured. He said any intervention in the economy has a fiscal component to it, which in turn, will have an impact on interest rates, current account deficit and currency. He said the fact that the country is now very concerned about a 7 percent inflation rate is a good sign. He said ‘we are becoming inflation intolerant and that is important to stabilize inflation expectations going forward and bring us back to the range of 4-6 percent (RBI's inflation target) at the earliest possible opportunity as the global conditions permit. So, inflation intolerance is a good thing.’