‘Private investment is picking up in the country’s sunrise sectors’

While the Centre is propelling the country’s growth engines through a capital expenditure push, private investments are also picking up in key sunrise sectors, Union minister for finance and corporate affairs Nirmala Sitharaman told Mint’s editor-in-chief Ravi Krishnan at the Mint India Investment Summit 2024. In a freewheeling fireside chat, Sitharaman also said though Centre-state relationship has been politicized recently, it hasn’t deteriorated. Edited excerpts:

You said the next set of reforms will be related to Panchayati Raj and urban bodies. Can you elaborate?

Sitharaman: I think in the last 20-30 years or even since 1991, whether it is urged by the IMF or whether the country (India) itself has been working towards reforming its economy, this topic has always been addressed to the Centre. We have been working with the states on reforms. Many states have enthusiastically come forward and are in a position to say that these (reforms) have helped them. It’s also the time to take it further because eventually when businesses start or investments come in, they have to be grounded at the level of some village, or some periphery in a city. And in those places, if elected bodies are not aware or are not ready to be open, transparent, and welcoming, everything that we do will be on paper and not on the ground.

ming anything to do with the reforms, but the question of monies being held there or in the courts has been partly addressed by the fact that we said cases cannot be opened beyond six years. Every time through the year when notices are sent so that the assessment year doesn’t get timebarred, by which time the CBDT sends the notice to the person asking for an explanation, if the explanation is fine, it is anyway dealt with by a faceless officer, and if it is fine, the matter ends there or else somebody else comes into the picture again. Faceless appeal happens, so an assessee doesn’t have to keep records for 10 years, but only six years. get this kind of a project, and states came begging for it. Prime Minister Modi hated that. We are elected governments. Why should we go begging to the Planning Commission? Because it was not even an authority. Therefore, when the true purpose of that kind of planning body was brought back with the Niti Aayog, a think-tank for the government, it gave us the advantage of deciding which project to do regionally or which projects should be taken up because of a concept; or the ways to attract new businesses; which are the states that have new leverages that they can use up; and which are the states that have to be reached out to because they have inherent challenges. And I think it is right that it’s been changed. I don’t think it adversely affects the fiscal federalism of the country.

Because of deteriorating Centrestate relations, do you think it kind of takes away from the efficiency of the capital expenditure projects in terms of implementation?

Deteriorating Centre-state relationship? I’m sorry, not at all. It’s completely politicizing the Centrestate relationship, and some states do it unabatedly. And they also approach the courts. And I take such opportunity to go to the court with a document to tell them where what has been done, where has the discrimination been, if at all, I explain it in the court. So deteriorating is not a language I want a fairminded journalist to use. Politicizing Centre-state, yes, you may want to say it. I’ll also join you on it.

The government has been pushing the pedal on capital expenditure. At the same time, you’ve also been signalling to the private sector to be more proactive in making fresh investments.

I think we are losing out in terms of seeing where it is happening by seeing where it is not happening. The private sector is going in a big way in the new renewable energy sector. The private sector is also taking high risks. They are looking at hydrogen, green hydrogen, ammonia, semiconductors, etc. So I think India’s private is investing in areas which are giving newer investment opportunities.

Which are these sectors seeing private sector participation?

I should say semiconductors, green hydrogen, solar, renewables, rare earth, genomics, AI, medical, diagnostic equipment, etc. They are bringing back API into this country, which we lost out on.

Private consumption growth has been kind of suppressed in the last few quarters. What is your view?

Do you think 8% GDP growth would have been possible for three consecutive quarters if there was no consumption happening? I am afraid we are becoming lazy while looking at the data. We want to look at month-onmonth for something which is already printed in red, but we are not willing to see the overall yearly picture.

What do you think will be the next big driver? I mean, let’s not look only at the next financial year, but over the next five years.

I have fairly elaborated on those issues. If you’re going to empower the women of this country, the youth of this country and the farmers, you have to strengthen agriculture and develop rural areas. And let us not forget the numbers here. By 2030, we are going to have 70 crore (700 million) Indians in the middle class, meaning a large middle-income group with purchasing power in their hand, which will touch 100 crore (1 billion) by 2047.

The Indian capital market has done well in recent times. But, regulators have cautioned about froth in certain parts of the market.

I, for one, would not say any further than saying that the Indian markets, even during great volatility outside, have held their own. Where there is a need for course correction, they have done it on their own... How they handle it has also been very unique to India. The regulators will have to do their job. I am not undermining that.

Indian markets have been lot more saner. Problems of overvaluation, is it short duration or is it froth or is it a bubble, all that debate can go on and silently I am sure the regulators will handle it.