EY Economy Watch Advocates Increased Capex for Advanced Tech Sectors

The EY Economy Watch report stresses the need for increased capital expenditure focusing on advanced technology sectors like AI, space, and robotics for sustainable growth. It also suggests fiscal consolidation to boost private investment and proposes diversification of India's export destinations amid external sector uncertainties.

The latest EY Economy Watch report advocates an increase in the share of capital expenditure in government spending, emphasizing sectors like AI, GenAI, space, and robotics. The report suggests focusing on advanced technology and infrastructure as crucial areas for growth.

Despite a revenue shortfall in FY26, EY predicts the fiscal deficit target of 4.4% of GDP can be achieved, recommending a 4% target for FY27. Fiscal consolidation remains vital to expand private investment opportunities by making investible surpluses available in the economy.

The report also highlights the need for public infrastructure in advanced tech segments and encourages private participation by leveraging public sector resources. It emphasizes the importance of diversifying export destinations to manage external sector uncertainties effectively.