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Informist, Saturday, Feb. 8, 2025

 

--Sitharaman: Expect recovery in pvt sector investments after Budget boost 

--Sitharaman: RBI-govt co-ordination important on inflation, growth

--CONTEXT: Sitharaman, RBI Malhotra brief media following post-Budget meet

 

NEW DELHI – Finance Minister Nirmala Sitharaman said that she expected a durable recovery in private sector investments after the announcement of tax breaks in the Budget and the Reserve Bank of India's decision to lower the repo rate on Friday. 

 

"After the Budget, the few inputs I've had from some business leaders is that the orders for fast-moving consumer goods for Apr-Jun are already getting booked, and the industry is clearly seeing signs of a possible recovery of consumption," Sitharaman said at a joint press conference with RBI Governor Sanjay Malhotra after she met the central bank's board in the customary post-Budget meeting in New Delhi on Saturday.

 

"As a result, many of them are looking at reviewing their capacity utilisation itself, which means you can safely see that the triggers for a consumption-driven cycle are clearly being felt by those who have to take investment decisions," the finance minister said. 

 

Broad-based private sector investment has not picked up for several years now, with the government leading the way on capital expenditure to revive the economy in the aftermath of the COVID-19 pandemic. But with the government's capital spending seen running into capacity constraints--FY26 Budget pegged capital expenditure at INR 11.2 trillion against INR 11.1 allocated in FY25 Budget--the government has called on the private sector to play its role in increasing investments. 

 

India's private sector will "eventually" have to play its role in making investments and the government will do its bit in encouraging the same, Manoj Govil, secretary in the finance ministry's Department of Expenditure told Informist after the Budget. 

 

Experts have cited modest consumption demand in the economy as a big hurdle for private sector investment. To revive demand in the economy, particularly for urban areas, the government announced tax breaks in the Budget for FY26. The Budget announced that there will be no tax on income of up to INR 1.2 million and also tweaked the income tax slabs and the tax rates. The RBI's Monetary Policy Committee on Friday lowered the repo rate after five years, bringing it down by 25 basis points to 6.25%.
 

The rate cut is another positive sign for private sector investment and "things can move in alignment", Sitharaman said on Saturday.  End

 

Reported by Shubham Rana

Edited by Deepshikha Bhardwaj

 

 

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