Public capital must catalyse private investment, not substitute it, says FM Sitharaman

FM Sitharaman: Public Capital Must Catalyse Private Investment

Theindiapostdaily.com – New Delhi: Finance Minister Nirmala Sitharaman emphasized that public capital must catalyse private investment rather than substitute it, announcing a comprehensive set of government initiatives designed to make infrastructure projects more appealing to private investors. Her statement underscores a strategic shift toward leveraging public funds as a foundation for private sector engagement.

The government has already mobilized ₹52,716.02 crore through disinvestment in the 2026-27 fiscal year, according to the Department of Investment and Public Asset Management. Major contributions include ₹31,514.89 crore from selling a 6.5% stake in Life Insurance Corp. of India Ltd, ₹5,542.36 crore from Coal India Ltd, and ₹4,357.36 crore from NHPC Ltd, alongside other transactions.

Reforms to Boost Private Participation

Speaking at a seminar on The Role of the New Development Bank in Mobilizing Private Capital in Member Countries during the BRICS Finance Ministers’ and Central Bank Governors’ meeting in Jaipur, Sitharaman outlined several structural reforms. These include viability gap funding for socially desirable but financially constrained projects, the hybrid annuity model for road infrastructure risk-sharing, credit enhancement mechanisms, and infrastructure investment trusts to recycle capital.

Additional measures encompass the National Infrastructure Pipeline for long-term investor visibility and PM Gati Shakti—the National Master Plan for Multimodal Connectivity—to enhance coordination and efficiency across sectors.

Sustained public capital expenditure, combined with these structural reforms, has significantly strengthened India’s infrastructure ecosystem. Public investment has expanded considerably compared to a decade ago, reflecting a deliberate strategy to build productive national assets across highways, railways, ports, logistics systems, digital infrastructure, and energy networks.

The Union budget for 2026-27 introduces new dedicated freight corridors, high-speed rail corridors, operationalization measures for national waterways, and a coastal cargo promotion scheme. Budgeted capital expenditure for FY27 stands at ₹12.22 trillion, representing an 11.5% increase over the FY26 revised estimate of ₹10.96 trillion.

For private capital to follow, infrastructure projects need more than funding. Multilateral development banks have a critical role in de-risking investments, improving project bankability, and strengthening investor confidence so that private capital can be mobilized at scale.

BRICS economies serve as major global growth engines but face common structural constraints in mobilizing private capital at scale. The challenge extends beyond capital availability to creating confidence, stability, predictability, and credible long-term frameworks needed to unlock sustained private participation across member countries.

Building a Collaborative Future

Sitharaman concluded by emphasizing that the future of development finance lies in partnership, with multilateral institutions, national governments, and the private sector each contributing distinct strengths. Economic affairs secretary Anuradha Thakur noted that capital mobilization must be anchored in enduring frameworks rather than relying solely on favorable conditions.

The seminar brought together senior policymakers, multilateral institutions, and private-sector leaders. A panel discussion featured IRDAI chairman Ajay Seth, NDB vice-president Roman Serov, Alessandro Teixeira from Sertrading, Tencent senior adviser Yongping Zhai, and Pankaj Sindwani from Tata Capital Decarbonisation Fund, along with representatives from BRICS countries, financial institutions, think tanks, and academia.

Frequently Asked Questions

What is the total disinvestment target for 2026-27? The government has raised ₹52,716.02 crore through disinvestment so far in the 2026-27 fiscal year, with major contributions from LIC, Coal India, and NHPC.

How much has been allocated for capital expenditure in FY27? Budgeted capital expenditure for FY27 stands at ₹12.22 trillion, which is 11.5% higher than the FY26 revised estimate of ₹10.96 trillion.

What role do multilateral banks play in private investment? Multilateral development banks help de-risk investments, improve project bankability, and strengthen investor confidence, enabling private capital to be mobilized at scale.

What are the key infrastructure reforms announced? Key reforms include viability gap funding, hybrid annuity model, infrastructure investment trusts, the National Infrastructure Pipeline, and PM Gati Shakti for multimodal connectivity.