Department of Economic Affairs (DEA) Secretary Ajay Seth has said that India needs to double the capital expenditure (capex) in the medium term from about 5-6 percent of the Gross Domestic Product (GDP) currently to fund infrastructure. He said efforts have to be made to channelise all avenues of savings for garnering resources for stepping up investment in the infrastructure sector.
Seth has stated that economic growth has to come from a virtuous cycle of private investment with private sector having a larger and larger economic role, while government’s role would be that of a facilitator. He said that the Indian capital market has to mature to enable investors to attract long term funds. He said ‘when it comes to long term financing, that is something our capital markets are yet to mature where we can attract long term investors from say the household sector to put that long term money. Because for infrastructure long term money is required’.
DEA Secretary further highlighted that India’s banking sector is now on a much stronger footing post major reforms such as the Insolvency and Bankruptcy Code and the setting up of a ‘bad bank’, among others. However, he noted that long term financing is an area where India’s capital markets are yet to mature.
