FM Sitharaman Slams India Inc For Hoarding Passive Funds, Urges Investment in Growth

India's private sector seems to be holding on to passive investible funds instead of utilizing them towards new capacity creation, even as the government capital expenditure continues to be one of the key drivers of economic growth, said Finance Minister (FM) Nirmala Sitharaman.

Speaking at the launch of A World In Flux: India’s Economic Priorities,  a book honouring event for economist Shankar Acharya at the India International Centre, she said that public investment had been proliferating in sync with PM Narendra Modi's directives to grow significantly. Further, she mentioned that states are competing amongst each other to attract the highest influx if funds, meanwhile, the central administration has worked to make foreign direct investment (FDI) business-friendly.

Why Is The Private Sector Behind? 

Despite the efforts to make investment worth the returns, private sector's spending has remained below public investments. Corporate balance sheets are healthier following the resolution of the twin balance sheet problems an a cut in corporate tax rates  in 2019, however, the firms are still unable to completely deploy funds available to them.  

Sun Pharma, Lupin, and Dr. Reddy's Issue Product Recalls In The U.S.

“Are they sitting over passive investible funds, meaning funds which are being engaged passively rather than investing in capacity expansions? That’s an issue which I would want industry to speak about,” she said.

Sitharaman I External Trade

Coming to external trade, the Union Minister said there are signs of renewed interactions with China. She signaled that both sides have shown interest in increasing economic engagement, though any opening would be cautious.

“Even the Chinese have been approaching us through the MEA, so there is some kind of beginning but how far it will take us is something we have to see,” she said.