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Union Finance Minister Nirmala Sitharaman was recently very critical towards the private sector for the lack of commitment shown in investing in the country despite India becoming a favourite destination of foreign companies, backed by a strong stock market. It is not known whether the bitter truth revealed by the Union Finance Minister will bring private Indian companies out of its slumber, but Sitharaman should be lauded for raising an issue which is severely hurting the Indian economy. For quite some time now, private Indian companies have become investment-shy and have used various sops offered by the government only to adjust their books. For example, during the Covid-affected period, the government had reduced corporate tax rate anticipating that companies would make new investments with the excess fund. In reality it has remained a distant dream as during April-June, 2022, capital expenditure by the private sector came down to a dismal INR 4.28 lakh crore. In-order to attract investments, the government has already announced a massive INR 2 lakh crore as part of Atmanirbhar Bharat initiative for more than 14 sectors, apart from increasing spending in infrastructure. Furthermore, the global scenario is also helping India as many foreign investors have shown interest in shifting from China to India, due to apprehensions of escalated tensions between the Asian giant and the US in near future. Thus, the Union Finance Minister has rightly asked private Indian companies to make investments in-order to reap maximum benefits from the prevailing situation.
According to traditional economists, who strongly oppose the theory of neoliberalism, equal participation from both the public and private sectors is needed to strengthen an economy. Traditionalists argue that the traditional economy is capable of handling the dual responsibility of welfare of the people as well as profitability. The problem arises when the private sector attaches importance to profitability and ignores its social responsibilities. This is the reason preventing the Indian private sector from making investments in the country. Private Indian companies are willing to invest only when returns are guaranteed. It is simply not possible to create such an atmosphere just to attract private investments. For example, these companies want to adopt a hire and fire policy which no government can allow, if it is committed to the well-being of the country’s workforce. It is due to the apathy shown by private Indian companies towards fellow citizens that no notable investment has been made by the private sector in the Northeastern region despite being offered various sops from time to time, including a five-year tax holiday by the government. As a result, the region still lacks behind even after 75 years of Independence, limited vistas are open to the local populace to earn their livelihood. Thus, the private sector should stand firmly beside the government and invest to make its presence felt in the global economy.