Chinmaya IAS Academy – Current Affairs Chinmaya IAS Academy – Current Affairs
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‘Bulk of investment from govt. firms’
The government hopes to get investments from public sector companies as well as the private sector, according to Finance Secretary Subhash Chandra Garg. Mr. Garg said that the government’s own contribution to gross capital formation was small and so, in the unlikely event that this was even doubled, the overall impact on capital formation would not make much difference. The bulk of the public sector’s investment came from companies owned by the government, he added, and it is hoped that this would grow. “The gross capital formation is about Rs. 55 lakh crore, about 30% of the GDP,” Mr. Garg told The Hindu . “ A greater part happens in the private sector and a smaller part happens in the public sector. In the public sector, a much smaller part happens in the government. The larger part happens by the public sector companies.” The Secretary said that in his estimation, the government expenditure on infrastructure or capital formation was not more than 7-8% of the total capital formation. “So, if somebody says you can expand the investment by expanding the government investment, that can’t actually make a lot of difference,” he added. “It’s impossible for the government to double the expenditure, which will make the deficits go up substantially. But even if it were to do it, on the total investment, this will make a relatively small contribution.”
