Sitharaman asks the private sector to lead India’s investment cycle
Finance Minister Nirmala Sitharaman told the Kautilya Economic Conclave in New Delhi on 3 October that the private sector should now lead India’s investment cycle, including research and innovation. She put research and development spending at 0.83 percent of gross domestic product, against 2.7 percent in OECD countries, and said the private share of that spending is 36 percent. She tied the call to fiscal prudence built since 2014 and to keeping trade open. The speech does not launch a new incentive programme.
Economics & Markets··Midday
Private capital is asked to lead the next investment cycle
India’s finance minister Nirmala Sitharaman, speaking at the 5th Kautilya Economic Conclave in New Delhi on 3 October, said the private sector must now lead the investment cycle, including research and innovation. She said private capital expenditure and higher spending on research and development would be crucial for maintaining momentum as India approaches the coming years from a position of strength. The conference is organised by the Institute of Economic Growth and the Ministry of Finance. She described uncertainty as a continuing condition that requires preparation, and she said policies have to be designed to build resilience amid that global uncertainty.[1], [2]
She argued that the resilience now displayed by the Indian economy had been built progressively since 2014, and that fiscal prudence had helped keep continuity in the government’s development commitments. Referring to Kautilya’s Arthashastra, she emphasised the treasury’s place in statecraft. Safeguarding public finances in quieter periods, she said, preserves the ability to respond when conditions change. Building resilience was a continuing task, she said, rather than a one-off exercise. The three-day conclave carried the theme Resilience in an Age of Flux and brought together policymakers, economists and international participants.[1], [2]
Research spending is 0.83 of output and the private share is 36
Sitharaman said India’s research and development spending stands at 0.83 percent of gross domestic product, compared with 2.7 percent in OECD countries, and that the private sector contributes 36 percent of the nation’s total research and development spending. She said raising both the size of investment and private-sector participation is essential to strengthening innovation capacity. She described research spending relative to national output as low and called for a larger private contribution. The speech sets out that call. It does not give a timetable for a new research incentive, or a figure for how much private research spending she wants to see, and it does not announce an incentive programme that has taken effect.[2], [1]
On infrastructure she said capital expenditure for this fiscal year was projected at 12.22 lakh crore rupees. She said the count of functioning airports had more than doubled since 2014. Those figures sat beside the research ratios, as measures of public capital already in the budget, while the investment cycle she wants led from here is the private one. She said greater autonomy in strategic inputs and resource security were further priorities, and that the next stage was to turn existing capacity into higher productivity, better employment and broader opportunities.[2], [1]
Open markets and long-term development finance stay on the list
Sitharaman said global openness remains important. Countries should diversify partnerships, keep markets open and honour commitments so that trade stays as stable and predictable as possible. She said nations should engage through dialogue and negotiated agreements so that global economic relationships stay open, predictable and rules-based, and so that geopolitical differences do not become barriers to trade and investment. She called for reform of multilateral development banks to translate into larger, faster and more predictable long-term finance for developing economies. She said the shift she wants would allow more citizens, enterprises and regions to take part in that development.[1], [2]
