Public capital must act as catalyst, not substitute for pvt investment: Sitharaman

Union finance minister Nirmala Sitharaman said public capital must act as a catalyst for private investment, citing VGF, HAM, InvITs, NIP and PM Gati Shakti.

The government believes that public capital must act as a catalyst, not a substitute for private investment, Union finance minister Nirmala Sitharaman said on Wednesday.

Nirmala Sitharaman said public capital should catalyse private investment, highlighting infrastructure measures and the need for confidence and policy stability. (PTI)

She said policy measures have been taken to support this principle, citing examples such as viability gap funding (VGF), the hybrid annuity model (HAM), infrastructure investment trusts (InvITs), the National Infrastructure Pipeline (NIP) and PM Gati Shakti.

VGF supports financially constrained but socially desirable projects, HAM ensures balanced risk-sharing in road infrastructure, and credit enhancement mechanisms help improve project bankability, she said while delivering the keynote address at a seminar on ‘The Role of the New Development Bank in Mobilising Private Capital in Member Countries’ on the sidelines of the BRICS Finance Ministers’ and Central Bank Governors’ (FMCBG) meeting in Jaipur.

She said InvITs help recycle capital and attract long-term institutional investors, while NIP provides long-term visibility to investors. PM Gati Shakti — the National Master Plan for Multimodal Connectivity — is improving coordination and efficiency, she added.

Building on this foundation, the Union Budget 2026-27 introduced several targeted measures to facilitate private sector investment, such as new dedicated freight corridors, new high-speed rail corridors, new national waterways and a coastal cargo promotion scheme, she said.

While BRICS economies represent major growth engines of the global economy, they also face common structural constraints in mobilising private capital at scale, she said. The challenge is not merely the availability of capital, but the creation of confidence, stability, predictability and credible long-term frameworks, which are essential to unlock sustained private participation across member countries, she added.

Sitharaman also delivered the inaugural address at the 1st BRICS Finance Ministers and Central Bank Governors’ (FMCBG) meeting under India’s BRICS 2026 chairship in Jaipur on Wednesday. Emphasising the importance of collective action and practical cooperation, she highlighted India’s BRICS 2026 chairship theme, “Building Resilience and Innovation for Cooperation and Sustainability”.

She underscored the need for BRICS members to work together towards resilient, inclusive and sustainable growth, while translating cooperation into practical outcomes across the finance track.