Sitharaman said unless both the government and the industry make the effort to ensure that the country stands on its own and be also able to supply to the world, the economic revival will always be facing a risk
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Finance minister Nirmala Sitharaman urged companies to boost investments and expand capacity without waiting for risks to vanish, as depressed private investments force the government to increase spending on public work programmes to blunt the pandemic’s impact.
Speaking at the CII Global Economic Policy Summit on Wednesday, Sitharaman said economic revival will always be at risk unless the government and industry work to ensure the country stands on its own feet and can supply to the world.
“We may say today on the back of revenge shopping, we are showing signs of positive growth, but until these challenges (of chips and container shortages, high crude oil prices) remain where they are, each of us has to think how best we can work out alternative solutions. I would strongly appeal to the Indian industry that you shouldn’t further delay looking at increasing capacities; you shouldn’t further delay looking at newer areas to move in with greater investments; you shouldn’t delay finding partners who can give you the necessary technology," she said.
The finance minister’s nudge comes two days after the Reserve Bank of India exuded confidence in its monthly bulletin that the stage is set for India’s investment cycle to kick-start and catalyze its recovery towards becoming the world’s fastest-growing economy.
The International Monetary Fund and the Reserve Bank of India have projected the Indian economy to grow at 9.5% in FY22 after contracting 7.3% in the previous year.
Sitharaman said the private sector has to walk the extra mile to support growth momentum. “Come forward, open up, expand, bring in new investment. You are seeing the kind of final finished commodities that are coming. You are seeing the kind of imports we are bringing of components which you are fully capable of manufacturing. FDIs are flowing in; there is no doubt. But can it also be visibly seen with India Inc. to stand up and say ‘yes, we are ramping up our capacities; no more we are sitting and watching when will the risks be far lesser.’ I was very touched when Uday Kotak spoke about income disparities which are growing. It can’t be bridged without you coming forward to offer jobs. It can’t be bridged without you reducing the import bill for us," Sitharaman said.
She said that while India is looking at healthy growth and the prime minister is committed to continuing investment in infrastructure development, the industry needs to take more risks.
“Ask us that ‘we are coming forward, here we have invested, but your policy is hindering me, don’t talk, walk the mile,’ You tell me that, and I will do it for you. Even this morning (in the cabinet meeting), the prime minister told each of the ministers: ‘please go back to your departments and tell me what more compliance burden you are sitting up with. Why can’t you remove it? Make it easy for the industry. We can’t be just talking that we have removed 1,500 archaic laws, and that’s the end of the story. No, you have to remove many more.’ Every minute, the prime minister intends to make it possible for industry to take its call. And there is no need for you to doubt it at all. This is a golden opportunity for India to stand up and prove that it can stand on its own two feet," she said.
Holding that India’s economic recovery after the pandemic is a collective effort, Sitharaman said the banking sector has remarkably turned around in the past year.
“They are no more the laggards of the Indian economy. The NPAs have been drastically brought down. More than ₹10,000 crore have been raised by public sector banks from the market. They are not looking at the government to fund them through recapitalization. Just in the last three weeks ending Diwali, banks went on a credit outreach programme, more than ₹75,000 crore have been distributed to four or five different categories. Banks have gone to the districts, worked together with NBFCs," she added.
Elaborating on the risks to the Indian economy from the high cost of crude oil prices, Sitharaman said that without any additional demand for fossil fuel, India’s fuel bill is going up.
“Nearly 85% of fossil fuel that we consume is imported. I am paying a lot more for the same quantity of crude that I am importing now than last year. Even if I am able to put more money into natural gas, the commitment with which I need to fund more transitional fuel and move towards renewable is at great risk because the global crude oil prices have gone up so much. Convincing signs that it is likely to come down are not yet visible. So, there is a serious challenge," she said.
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