NEW DELHI: In a big push to lift growth to 8 per cent in the current financial year itself, the government is thinking of ways to ramp up public spending to provide an investment stimulus to the economy, being held aloft on the strength of just private consumption as of now.

It is believed that Chief Economic Adviser Arvind Subramanian may be tasked with working out how much investment would be required to achieve a GDP growth rate of 8 per cent this year and also how this target can be met. “Public investment is the key to boost growth,” said a top government official, reflecting the thinking behind the move.

The Indian economy is expected to have grown 7.6 per cent last fiscal and most estimates suggest it will likely clock the same rate this year as well. The Narendra Modi government had pushed public spending strongly last year to shore up the economy amid global volatility and the absence of private investment.

The government had resisted suggestions, including from Subramanian himself, to relax fiscal goals to step up public investment in the FY17 Budget. “We would like to get these higher levels of investments approved in the supplementary grants of the monsoon session, or latest in the winter session,” the official said.

The more investment gets delayed, the weaker the impact, he added, indicating the urgency on the government’s part to step up growth.

The move follows the realisation in the government that with private investment lagging, public investment will have to drive GDP growth.

Subramanian had in fact alluded to the need for public investment and cyclical adjustments to fiscal goals in the mid-year economic review as well as the Economic Survey. “Given the continuing weakness of private investment, public investments may need to be accelerated to fill in for and indeed crowd in private investment,” India Ratings said in a recent report.

Private investment remains patchy with only select pockets such as renewable energy seeing marginal improvement. Private equity has also seen some activity but this is restricted to select sectors and may not help push growth to a higher trajectory.

The government’s decision to stay with the committed fiscal deficit target of 3.5 per cent of GDP has constrained it from stepping up public spending, but it may be able to make some room for itself. The committee to review the Fiscal Responsibility and Budget Management ( FRBM ) Act set up under the chairmanship of NK Singh could suggest a fiscal deficit range as mentioned by Finance Minister Arun Jaitley while announcing the panel. This would give government the comfort to step up capital spending. The committee has to submit its report by October 31.

HDFC Bank chief economist Abheek Barua agreed a cyclically adjusted fiscal cap and the FRBM review could give the government the freedom to make such adjustments. That seems the only way out as unconventional monetary measures have been losing their potency, as seen in Europe, he said.