At a time when the economy is desperately working to achieve pre-pandemic growth rate, ministries related to infrastructure development such as railways, telecom, health, etc. are failing to make enough capital investments (CapEx), even though there is no dearth of funds for this purpose. The situation has become so alarming that Union Finance Minister Nirmala Sitharaman recently pulled up the concerned ministries for sluggish performances and asked them to speed up productive spending to provide required stimulants to the struggling economy. Sitharaman has even written a letter to the Railway Minister urging him to increase spending in the infrastructure sector as the ministry has managed to spend only 61 per cent of the funds allocated in the budget for infrastructure. Other ministries are also miserably behind the target in making capital investments even though we are in the ninth month of the present fiscal.
According to the latest data released by the Controller General of Accounts, in the first seven months of the ongoing fiscal, only 45.7 per cent of the budget allocation has been invested in the infrastructure sector. Apart from Railways, capital investments in power, atomic energy, telecom, housing and health sectors too are dismally low in comparison to the fund allocated in the budget. Economists are of the opinion that if CapEx is not drastically increased in coming months, it will be difficult for the country to record 9.5 per cent growth.
Even after the timely warning by the Union Finance Minister, the chance of meeting the CapEx target looks bleak as ministries like power and telecom have not even invested 15 per cent of the budgeted allocation in the infrastructure sector. As things stand now, the ministries will be forced to return the money meant for infrastructural developments. If that happens, it will be a huge blow to the Indian economy as private investments are not forthcoming as yet in fear of a possible third wave of the pandemic. In absence of private investments, the only way to take the economy forward is to enhance CapEx. But the failures of several ministries in making necessary investments in infrastructure are preventing the Indian economy from regaining its health which is trying to make a comeback after the nearly 25 per cent contraction in the first quarter of the last fiscal due to the outbreak of the pandemic.
From that position, if the Indian economy has managed to make a turnaround, it is because of the fact that government expenditure has increased in both welfare and infrastructure sectors. But poor CapEx indicates that at the end of the current fiscal, the government may end up spending more in the welfare sector instead of reaching the potential estimated earnings by investing in the infrastructure sector. In such a situation, the government will be left with no other option but to sell off its assets to private parties to meet the deficit as doles only weaken the economy. So, the government should ensure that the fund meant for infrastructure development should be spent within this fiscal year for the Indian economy to continue its recovery.