“Economic growth has to come from a virtuous cycle of private investment with private sector having a larger and larger economic role, while Government’s role would be that of a facilitator,” said Mr Ajay Seth, Secretary, Department of Economic Affairs, Ministry of Finance.  He was speaking at an interactive session on Financing Growth, at the first edition of the CII Global Economic Policy Summit 2021: Rebuilding Economies, organized by the Confederation of Indian Industry.

In the past 5 to 7 years, there has been a pivotal change in the economic thinking for future economic planning, where more reforms, removing frictions and cleaning up of processes has been the overarching approach of the Government to fuel India’s future growth, he added.

Mr Seth further highlighted that India’s banking sector is now on a much stronger footing post major reforms such as the Insolvency and Bankruptcy Code and the setting up of a ‘bad bank’, among others. However, long term financing is an area where India’s capital markets are yet to mature, he noted.

He further stated that we need to double capital expenditure, which is at present about 5 to 6% of GDP, on a medium-term basis, and this would require all avenues to channelize savings.

Mr Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM), Ministry of Finance, stated,  “Schemes such as the National Infrastructure Pipeline of INR 111 trillion, Asset Monetization Plan of INR 6 trillion and 13 PLI schemes are expected to generate about INR 2.2 trillion of investments in FY 2022-24, which would possibly lead to a 30% rise in capex of the private sector and all these are indicators of the Government’s trust in the private sector.”

Commenting on the new PSE policy, Mr Pandey added that it is a “very bold and clear policy by the Government and its implementation would require private sector participation.” He stated that Air India would be handed over in December, while 5-6 privatisation proposals would be taken forward during this financial year. We can expect financial bids for NINL, SCI, BEML and Pawan Hans during the year, he noted.

Mr. Pandey further mentioned that the Hon’ble Prime Minister’s clarion call was to streamline and simplify processes which would lead to faster conclusions of financial bidding transactions and private sector will have an important role to play in this regard.

In the context of pandemic management, Mr Pandey stated that the Government followed a dual approach that looked at both immediate as well as medium and long terms measures. “Addressing new challenges such as energy transition, climate change as well as the fundamental long term challenge of removing poverty and raising standards of living led to several structural reforms and one primary reform was how to work together in more close partnership with private sector,” Mr Pandey added further.

Mr Uday Kotak, Past President CII and Chairman of the CII Global Economic Policy stated, “We are now finding a much more dynamic development of the intermediation between the issuer and investor, that must be leveraged in economic policy thinking.”

“The phenomenal recovery and the upswing that we have seen in the Indian economy have been enabled by the various landmark policy reforms undertaken by the Government,” added Mr Chandrajit Banerjee, Director General, Confederation of Indian Industry.

November 17, 2021