RBI Monetary Policy Committee (MPC) member Jayanth R Varma has said that capacity utilization has been slowly increasing and private capital expenditure would pick up in the coming years. He noted that in the last couple of years, the government has shouldered the burden of investment, while private capital expenditure has been muted.
The MPC member has stated that at the same time, capacity utilization has been slowly creeping up and it is approaching levels that prompt the private sector to undertake capital expenditure at least in some sectors. Moreover, he said large public sector infrastructure investment of the recent years has the potential to crowd-in private sector investments.
Asked whether India can escape the middle income trap, he said it is imperative that India makes this transition because failure would be extremely painful for the country's vast population. Moreover, he said the task is not easy as it would require a growth rate of 7-8 per cent sustained over many decades, and not many countries have done this successfully. Noting that India's democratic polity makes governments responsive to the needs and aspirations of its people, he said over the decades, India has created the capabilities both in private and public sector to surmount the obstacles that will surely arise in this path.
