FM Sitharaman says India Inc sitting on passive funds instead

Finance Minister Nirmala Sitharaman on Saturday said India’s private sector appears to be holding on to “passive investible funds” instead of deploying them towards new capacity creation, even as government capital expenditure continues to be the main driver of economic growth.

Speaking at the launch of A World in Flux: India’s Economic Priorities, a book honouring economist Shankar Acharya at the India International Centre, she said that public investments have been increasing consistently, in line with Prime Minister Narendra Modi’s directives to grow significantly. She added that states are also competing aggressively to attract investments, while the Centre has worked to keep foreign direct investment policies business-friendly.

Private sector investment lag

Despite these efforts, she noted, private sector spending has not matched the pace of public investments. Corporate balance sheets are healthier following the resolution of the twin balance sheet problem and a cut in corporate tax rates in 2019, yet companies are not fully deploying their available funds. “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.

Re-engagement with China

On external trade, Sitharaman said there are signs of renewed interactions with China. She indicated 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 added.

(Edited by : Poonam Behura)