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Informist, Thursday, Nov. 21, 2024

 

--CEA: Need to focus on higher budgetary allocation to education

--CEA: See risk from informalisation seeping into pvt sector cos

--CEA: Seeing difficulty in meeting FY25 capex aim as states' capacity low 
--CONTEXT: Chief econ adviser at ISID India industrial transformation event

NEW DELHI - The central government is seeing difficulty in meeting the ambitious capital expenditure target for 2024-25 (Apr-Mar) as the capacity and capability of states governments to implement capital expenditure is low, Chief Economic Adviser to the government V. Anantha Nageswaran said Thursday.

The government has increased the capital expenditure allocation in the last three to four budgets but allocations alone are not enough, implementation is necessary, Nageswaran said at a national conference on industrial transformation organised by the Institute for Studies in Industrial Development. "Local governments are key for implementing of capex. Their facilitation takes the benefits (of capital expenditure) to a large base," the government's top economist said.

 

The government has set a capital expenditure target of INR 11.11 trillion for the current fiscal, against capital spending of INR 9.49 trillion in FY24. Till September, the government had spent 37% of the capital expenditure target. The government's capital expenditure in Apr-Sept was down 15.4% on year at INR 4.15 trillion. The government needs to spend INR 6.96 trillion in six months to meet the capital expenditure target for the year.

Speaking about industrial policy, Nageswaran said labour incomes are stagnating and there is a growing divergence between the profits of corporates and wages they pay. He expressed concern about a few informal sector characteristics like variable pay and incentive-based pay structures seeping into the private sector. "This informalisation of the sector is worrying," he said.

 

Earlier in the month, he had said that incentive-based work compensation rather than increasing salaries had more than one negative ramification, including denting household savings.

Institute for Studies in Industrial Development Director Nagesh Kumar, who is also one of the three newly appointed external members on the Reserve Bank of India's Monetary Policy Committee, said India needs to particularly make the manufacturing sector robust to bring about an industrial transformation. Given the global economic conditions, India is in a bright spot to upscale its manufacturing sector and increase the job opportunities, he said. "There is a need to improve on that front."

 

Speaking about employment, Nageswaran said that education - especially higher secondary and tertiary - are of prime importance to create a set of "employable" candidates. In order to do that, he said, budgetary allocation towards education should increase. In the Union Budget for FY25, the government has earmarked INR 1.48 trillion for education and employment and skill.

 

However, Nageswaran noted that an overflow of skilled citizens while employment opportunities saturate will have second order implications. Policy-making needs to address vocational, technical, services, and manufacturing-based training to address the demand for jobs, while not suffocating a particular sector, he said.

 

The Budget for FY26 will likely be presented on Feb. 1.  End

Reported by Priyasmita Dutta 

Edited by Ashish Shirke

 

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