Capex push to continue, but fiscal prudence non-negotiable: FM

Union Finance and Corporate Affairs Minister Nirmala Sitharaman on Monday reaffirmed the Government’s commitment to sustaining capital expenditure (capex) to support economic growth, while stressing that fiscal prudence would remain non-negotiable.

“Capex is a very important component of our growth strategy. Because till such time the private sector will be able to expand capacity or make capital investment, it is important for the Government to push through with capital investment,” she said at an event organised by HSBC India in Mumbai.

Pointing to the returns from public investment over the past four to five years, she said the multiplier effects had strengthened the Government’s confidence in continuing the spending push.

“We find that in the last 4 to 5 years, we have got very good success. The multipliers actually work and it gives us confidence that the Government is not going to sit back and watch whether growth is growing without doing much,” she said.

The Government would be willing to extend capex support to ensure that the growth momentum was not disrupted. “We will continue doing that because India’s growth momentum should not be lost at all,” she said.

However, Ms. Sitharaman made it clear that higher public spending would have to be balanced against fiscal constraints.

“We need to be fiscally prudent,” she said, adding that while some advocated spending without worrying about sovereign credit ratings, responsible expenditure was essential.

“I agree we need to spend but it has to be done responsibly and fiscal prudence will be our top priority,” she emphasised.

“We have to be prudent and we have to be creative based on which we can encourage growth and stability,” she added.

The Finance Minister also called for greater confidence in India’s economic prospects, urging businesses and experts to move beyond pessimism and sector-specific concerns.

“India must to talk with optimism and there needs to be reduction in cynicism,” she said, questioning why experts who considered their own sectors healthy remained apprehensive about the broader economy.

“If your sector doing fine, others sectors in India must be similarly fine. So can the narrate and language change?” she asked.

Citing robust GST collections announced on Sunday, she said economic fundamentals remained strong, with banks performing well and economic activity holding up despite global uncertainties.

“There are no shortages, even fuel is reaching on time despite Hormuz,” she said.

Attributing India’s resilience partly to political stability, she said, “The stable leadership that Prime Minister Modi is giving us is remarkable. Because of stability India is able to reach that level. Our people are working very hard. We have to speak with that confidence.”