Finance minister Nirmala Sitharaman on Thursday said that strong decisions taken by the Modi government have ensured steady flow of foreign direct investment (FDI) into the country which is far greater than what comparable economies have attracted during the pandemic. She reminded that FDI is not hot money but reflects the commitment of investors to remain invested in India.
Addressing the annual session of the International Chamber of Commerce, she said the government has not shied away from taking bold reforms, including those relating to agriculture and labour codes.
Sitharaman also said that she will ask banks to go for coordinated loans with non-banking finance companies (NBFCs) in line with the State Bank of India.
She reminded the audience that the government was repeatedly asked why it was not taking big reforms as were undertaken in 1991. She said 1991 was a big reform due to the balance of payments crisis but the momentum did not sustain subsequently. “Had bold reforms taken after 1991, the strength of Indian economy would have been far greater than what was there in 2020.”
Because of the bold decisions and strong macroeconomic fundamentals of the economy, FDI money came into India even during pandemic, she said.
“This is not portfolio money. It is FDI. Investors want to remain invested in India and also to be on your board to be involved in the decision making of companies to an extent,” she told industrialists.
Total FDI inflows through this route stood at $28.10 billion, of which equity inflows were $23.44 billion during the second quarter of the current fiscal year.
This takes the FDI equity inflows to $30 billion during the first half of the current fiscal year, which is 15 per cent more than those during the corresponding period of 2019-20 (FY20).
She reiterated that the next Budget will have provisions for public expenditure at a higher amount than now.
She said because of the government’s move to cut corporation tax rates and reforms, several sovereign and pension funds are in talks with the National Investment and Infrastructure Fund (NIIF) to invest in the infrastructure sector.
Even as meeting the disinvestment target of Rs 2.10 trillion pegged in the Budget for 2020-21 is an uphill task now, the finance minister said the Department of Investment and Public Asset Management (DIPAM) is engaging in all those companies where the Cabinet has given approval to sell the government stake.
“EoIs (Expressions of Interest) have come in, the next stage is going on. Even this financial year, I expect DIPAM to be able to prove that they are more actively engaging in those disinvestments for which the Cabinet has given approval,” she said.
She also said that public sector banks are being professionalised. “(They are) making sure that risk officers are being brought from outside,” she said.
Sitharaman said the government has taken several measures to support the economy but no amount of intervention will be adequate to deal with the crisis triggered by the Covid-19 pandemic.
Exuding hope, Sitharaman said, “We are seeing clear signs of revival. But that has to sustain. We need inputs from the industry at this extraordinary time during Budget-making.”