Private investment - the statesman

India’s private investment conundrum is a pressing issue that requires immediate attention from policy makers. With a 25 per cent year-over-year decline in intended private capex for FY26,

it’s clear that the economic headwinds are strong. The manufacturing sector, which accounts for the largest share of intended private capex at 43.8 per cent, is particularly concerning.

Several factors contribute to this decline, including deteriorating demand conditions, reduced government spending, and global protectionism concerns. The Reserve Bank of India’s Financial

Stability Report highlights a widening gap between savings and investment within Indian households, with net financial savings dropping significantly to 5.3 per cent of GDP in FY23 from 7.3

per cent in FY22. This decline in savings can limit the pool of funds available for investment in productive assets, potentially impacting economic growth. To revive private investment, the

government needs to create a favourable investment climate by addressing regulatory bottlenecks, offering fiscal incentives, and ensuring stable economic policies. Accelerating government

spending on infrastructure projects can create jobs, spur demand, and lay the groundwork for sustained economic growth. Moreover, policymakers must balance supply-side incentives with

demand-side stimulus to achieve inclusive and sustainable growth. Rising unemployment in India is another significant economic challenge that directly impacts livelihoods and slows down

overall economic growth. Advertisement With a large and growing population, the pressure to create job opportunities is immense. The government and businesses need to focus on creating more

job opportunities through investments in infrastructure, skill development programmes, and support for small and medium-sized enterprises (SMEs). Moreover, the government needs to prioritise

sectors that can drive employment growth, such as manufacturing and services. By promoting these sectors and creating an enabling environment for businesses to thrive, India can unlock new

opportunities for economic growth and job creation, ultimately reducing unemployment and improving the standard of living for its citizens. Global economic uncertainties, including changes

in US fiscal policies, interest rates, and global trade relations, can have ripple effects on India’s economic trajectory. Advertisement The US Federal Reserve’s monetary policy decisions

can impact global borrowing costs, commodity prices, and currency stability, all of which directly influence India’s economic health. To overcome these challenges, India needs a

multi-pronged approach that combines policy reforms, infrastructure development, and human capital development. By focusing on reviving private investment, creating job opportunities, and

promoting economic growth, India can navigate its economic challenges and emerge stronger. The government and businesses must work together to address the structural weaknesses in the

economy and leverage the crisis as an impetus for reform. With collective action and effective policymaking, India can maintain its growth momentum and achieve sustainable economic growth.

Ultimately, India’s economic future depends on its ability to adapt and innovate, making it essential to foster a culture of entrepreneurship and risk-taking to drive growth and development

forward. With sustained efforts, India can unlock its economic potential and achieve long-term prosperity and growth for all citizens. Advertisement