The government is roping in corporate India to increase domestic private investment.
Commerce minister Nirmala Sitharaman met Aditya Birla Group chairman Kumar Mangalam Birla on Monday, and talked about the group’s expansion plans for the textile sector.
In the next 15 days, Sitharaman is set to meet other business leaders, including Boeing India president Pratyush Kumar, Fortis Healthcare executive chairman Malvinder Mohan Singh and East India Hotels CEO Vikram Oberoi, to discuss their India plans and understand the roadblocks they are facing.
The talks will focus on specific industries, Sitharaman told HT.
For example, for Boeing, discussions will centre around the new manufacturing units that the company have announced under the Make in India programme. The US-based aircraft maker’s hiring plans will also come up during the discussion, she added.
“Various ease of doing business processes are currently underway. Different ministries and departments are talking to stakeholders to fast track stalled projects, and the finance ministry has also asked banks to increase lending to the corporate sector. Now the idea is to meet key people and see what more needs to be addressed,” Sitharaman said.
Domestic private investment, crucial for sustaining growth and creating jobs, has been termed as the next big challenge for the Modi government by various global research and rating agencies.
“With external demand likely to remain lacklustre, a sustained improvement in domestic private investment would be needed to sustain the growth momentum,” Moody’s said in a recent report.
“The government cannot control external and domestic factors, such as, slow export growth, high corporate leverage, excess capacity and the clean-up of banks’ balance sheets, which are curbing private sector investment. Since sluggishness in demand could also be attributed to high interest rates, liquidity squeeze and policy bottlenecks, the idea is to meet industry leaders to address these bottlenecks,” the commerce minister said. “We will be talk about how these companies can now start creating jobs, and see how best they can utilise their manufacturing units for both domestic as well as export markets.”
The government is pinning its hopes on a normal monsoon to boost rural demand, critical for overall economic growth.
“The investment cycle is on the cusp of a positive turnaround with expected normal monsoon, lowering of interest rate cycle and higher public investment in infrastructure. Investment will see a definitive revival in the next six to nine months,” said Chandrajit Banerjee, director-general, CII.
However, State Bank of India, the country’s biggest lender, said in a research note on Monday that credit growth in the country is unlikely to revive “materially” in the near term, due to slow demand.