February 12, 2021 3:29:19 am
A day after Prime Minister Narendra Modi emphasised the crucial role of the private sector in the Indian economy and pitched for privatisation at a time when there has been a decline in private sector investment, industry leaders including Anand Mahindra of the Mahindra Group, Sangita Reddy of Apollo Hospitals, JSW Group’s Sajjan Jindal and Uday Kotak of Kotak Mahindra Bank welcomed the statement.
“For the first time ever, a Prime Minister of our country has publicly shared his respect for the Indian entrepreneurs. This is great encouragement for the community that has been creating wealth and jobs in the country,” said Sajjan Jindal in a tweet on Thursday.
“Welcome words of encouragement at a fragile time for private enterprise due to the pandemic. Now we have to live up to the expectations…both in performance & governance,” tweeted Anand Mahindra.
Modi’s statements pitching the importance of the private sector come in the backdrop of a push towards government spending, which the government expects will help crowd in private investment. The government is working towards creating a Development Finance Institution for infrastructure financing, aiming to have a government owned DFI and have space for the private sector also.
Private sector investment in the country has been tapering over the years, while the government’s efforts to elicit such expenditure have been largely unsuccessful. This includes plans to raise Rs 2.1 lakh crore in funds through divestment and strategic sales of government-owned enterprises in 2020-21, of which the centre was only able to raise Rs 19,499.07 crore.
As per CMIE data from October last year, 44 per cent of the new investments in the July-September quarter were by government agencies and the rest were by the private sector. Rs 258 billion of investment proposals made by the governments, both central and the states, were the lowest made by them in any quarter in the past 16 years since June 2004, while the private sector investments of Rs 328 billion were also the lowest by them since June 2004. Also, as per CMIE, cumulative new investment proposals in 2020-21 were estimated at Rs 1.3 trillion, with total not expected to cross Rs 5 trillion, which hasn’t been lower than that level since 2004-05.
Step to build confidence
Private sector investment has been tapering over the years, while the government’s efforts to elicit such expenditure have been largely unsuccessful. The Prime Minister’s speech seems to have enthused confidence in India Inc about the nation’s growth story.
Other industry leaders also welcomed PM’s stayement. Uday Kotak, who is the president of the Confederation of Indian Industry, said that the Prime Minister’s recognition of the role of the private sector in Parliament “has boosted the morale of every entrepreneur.” CII Vice President and Bajaj Finserv Chairman and Managing Director Sanjiv Bajaj said it is encouraging for all entrepreneurs to hear the PM lauding the role of the private sector in wealth creation.
“While this speaks of the vision of (the) honourable Prime Minister in the role played by the industry in nation building; it also puts enormous responsibility on the business community to rise up to keep national interest above everything else,” said Federation of Indian Chambers of Commerce and Industry President Uday Shankar. The private sector contributes as much as 87 percent to India’s GDP and almost 60 percent to employment in the country, he said, adding that, “if India has to lift its teeming millions out of poverty, we need to create a national consensus to ensure that those who create jobs, economic value and a culture of enterprise are recognised for their contribution.”
“Government, under his (Modi’s) leadership has shaped a great environment for doing business,” said Tata Steel managing director and CII president-designate TV Narendran.
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