Finance Minister Outlines Growth Strategy with Sustained High Capex
Finance Minister Nirmala Sitharaman has articulated the government's primary objective of sustaining economic growth, emphasizing continued heavy lifting through capital expenditure in the Union Budget for 2026-27. In an exclusive interview, Sitharaman highlighted that while private sector investment is showing signs of revival, the government remains committed to driving infrastructure development and economic expansion through substantial public spending.
Government's Capex Commitment and Private Sector Revival
The government has allocated Rs 12.22 lakh crore towards capital expenditure for the upcoming fiscal year, representing an increase of more than 11.5 percent compared to the previous year's allocation. This substantial investment underscores the administration's determination to maintain economic momentum through infrastructure development and capacity building across key sectors.
Sitharaman noted encouraging signs of private sector participation emerging from what she described as a "passive mode." "Investments earning passive income are now moving to investments in expanding capacities or setting up new businesses," she observed. The Finance Minister pointed to particularly strong activity in partnerships within newer, frontier sectors, while acknowledging that traditional core manufacturing industries might see slower initial participation.
Global Investor Sentiment and Economic Realism
The Finance Minister also addressed changing global investor sentiment, noting increased interest from countries like Norway and Canada whose pension funds and sovereign wealth funds are showing keen interest in Indian markets. She acknowledged that some North American fund managers maintain a cautious approach, waiting to observe market trends before committing substantial investments.
Regarding the government's economic projections, Sitharaman defended the 10 percent nominal GDP growth rate estimate as "realistic" rather than conservative. "I've maintained that I come up with realistic numbers and we are able to also achieve each one of them," she stated, emphasizing the administration's track record of meeting fiscal targets.
Budget Measures and Clarifications
Sitharaman addressed specific budgetary measures, including the decision to tax capital gains on sovereign gold bonds in the secondary market. She clarified that the sovereign gold bond scheme was primarily designed for investors who purchase at issuance and hold until maturity, distinguishing them from secondary market participants.
When questioned about the Securities Transaction Tax increase on futures and options despite reduced trading volumes, Sitharaman referenced a Securities and Exchange Board of India study indicating that 90 percent of participants in these markets were experiencing losses. She suggested this data supported the government's regulatory approach to these financial instruments.
Sustained Focus on Economic Expansion
The Finance Minister's comments reinforce the government's dual-track approach to economic management: maintaining substantial public investment while encouraging private sector participation. This strategy acknowledges both the continued importance of government-led infrastructure development and the emerging signs of private investment recovery across various sectors of the economy.
As India navigates global economic uncertainties and domestic growth challenges, Sitharaman's emphasis on realistic projections, sustained capital expenditure, and measured regulatory interventions reflects a comprehensive approach to economic stewardship aimed at maintaining India's position as one of the world's fastest-growing major economies.
