Finance minister Nirmala Sitharaman exhorted India Inc to step up investments to help the economy move on “all the four engines” of growth. She also said the government would continue to give thrust to public expenditure to pump-prime the economy. “My priority is public expenditure on infrastructure and to ensure states get their share of infrastructure outlay,” the minister said, speaking at a function organised by the CNBC TV 18 group in Mumbai.

The Centre’s budget capex for the next fiscal is pegged at Rs 7.5 trillion, up 36% from the revised estimate (RE) for the current year even though its total expenditure is budgeted to grow by a very modest 4.6%, signifying a desire to improve ‘quality’ of spending.

The minister indicated not only government expenditure, but another two pillars of the economy namely consumption and exports have also started looking up, but private investments, the fourth pillar, continued to languish, as Corporate India remained wary of fresh investments.

Stating that she was cautiously optimistic about the economy, the minister said: “Prior to the Russia-Ukraine crisis, the Indian economy was doing well. Because of the new situation, there are several challenges now. Drop in the supplies of natural gas (being one of them).”

She added: “Since our fossil fuel dependence is so high, there has been a clear commitment about moving into renewable energy. The transition arrangement with natural gas is now facing a challenge as supplies are lesser and cost is spiking up.”

The minister said the government was assessing the situation and asserted India’s commitment towards climate change were going to be fulfilled. He said the high prices of metal and sulphate could not have been factored at all, prior to the crisis. “We have to be prepared. The prices are not coming down in the near future. These are challenges.”

The fiscal deficit in FY23 is projected to be 6.4% of the GDP, down from 6.9% in the current fiscal against the 6.8% originally budgeted. Unlike in the past, the Budget for FY23 focuses on hand-holding the state governments on the creation of capital assets, the minister had said earlier.

The Centre has made a provision of Rs 1 trillion in interest-free loans for states towards capital expenditure, which is over and above the stipulated state government borrowing of 4% of GSDP. The Budget’s renewed focus on capital expenditure is aimed at crowding-in private investments going forward.

India Ratings believes that high commodity prices especially of crude oil will further dampen the consumption demand and will also be a risk for the much awaited revival of the private corporate investment cycle.