Public capital must catalyse private investment, not substitute it, says FM Sitharaman

New Delhi: Public capital should serve as a catalyst for private investment rather than replace it, finance minister Nirmala Sitharaman said on Wednesday, outlining a series of government measures aimed at making infrastructure projects more attractive to private investors.

The remarks come at a time when the government has raised ₹52,716.02 crore through disinvestment in 2026-27 so far, according to data from the Department of Investment and Public Asset Management. The receipts include ₹31,514.89 crore from the sale of a 6.5% stake in Life Insurance Corp. of India Ltd, ₹5,542.36 crore from Coal India Ltd and ₹4,357.36 crore from NHPC Ltd, among other transactions.

Speaking at a seminar on The Role of the New Development Bank in Mobilizing Private Capital in Member Countries on the sidelines of the BRICS Finance Ministers’ and Central Bank Governors’ meeting in Jaipur, Sitharaman said the government had undertaken multiple reforms to support greater private-sector participation in infrastructure.

These include viability gap funding (VGF) for financially constrained but socially desirable projects; the hybrid annuity model (HAM) for balanced risk-sharing in road infrastructure; credit enhancement mechanisms to improve project bankability; infrastructure investment trusts (InvITs) to recycle capital and attract long-term institutional investors; the National Infrastructure Pipeline to provide investors with long-term visibility; and PM Gati Shakti—the National Master Plan for Multimodal Connectivity—to improve coordination and efficiency.

Building investor confidence

Sitharaman said sustained public capital expenditure, alongside structural reforms, had strengthened India's infrastructure ecosystem. Public investment has expanded significantly compared with a decade ago, reflecting a deliberate strategy to build productive national assets across highways, railways, ports, logistics systems, digital infrastructure and energy networks, she said.

She also highlighted measures in the Union budget for 2026-27 aimed at facilitating private-sector investment, including new dedicated freight corridors, new high-speed rail corridors, measures to operationalize new national waterways and a coastal cargo promotion scheme.

The Centre has also stepped up capital spending. Budgeted capital expenditure for FY27 stands at ₹12.22 trillion, 11.5% higher than the FY26 revised estimate of ₹10.96 trillion, keeping the focus on infrastructure-led growth.

For private capital to follow, however, infrastructure projects need more than funding. Sitharaman said multilateral development banks have a critical role in de-risking investments, improving project bankability and strengthening investor confidence so that private capital can be mobilized at scale.

BRICS economies are major growth engines of the global economy but face common structural constraints in mobilising private capital at scale, she said. The challenge is not simply the availability of capital, but creating the confidence, stability, predictability and credible long-term frameworks needed to unlock sustained private participation across member countries.

Sitharaman concluded by emphasizing that the future of development finance lies in partnership, with multilateral institutions, national governments and the private sector each bringing distinct strengths.

Earlier, economic affairs secretary Anuradha Thakur said the seminar was particularly relevant as development finance moves into a phase where scale must be matched with resilience. Capital mobilization cannot depend solely on favourable conditions and must be anchored in frameworks that endure, she said, adding that strengthening such frameworks is where multilateral collaboration can add lasting value.

The seminar brought together senior policymakers, multilateral institutions and private-sector leaders and was followed by a panel discussion involving IRDAI chairman Ajay Seth, NDB vice-president Roman Serov, Alessandro Teixeira from Sertrading, Tencent senior adviser Yongping Zhai and Pankaj Sindwani from Tata Capital Decarbonisation Fund, along with representatives from BRICS countries, financial institutions, think tanks and academia.