Private Sector Investment Crucial for India's Growth: S&P

New Delhi, Sep 24 (KNN) Global rating agency Standard & Poor's (S&P) has released an analysis suggesting that India's private sector will need to take on a larger role in driving the country's economic growth due to constrained fiscal settings. 

The report, titled ‘India's growing role in the global economy,’ highlights that the Indian government may have limited capacity to provide financial support compared to previous years.

S&P notes that India's net general government debt stands at approximately 86 per cent of GDP, a factor that may prompt the government to focus on strengthening its balance sheet and building fiscal buffers. 

The analysis reveals that post-pandemic recovery has been primarily supported by government infrastructure projects and household spending on investments.

The report points out a surprising lack of investment from the private sector, which traditionally accounts for about 37 per cent of total investments in India. 

This hesitation comes despite favourable conditions, including lower corporate taxes, strong financial health among companies, and the government's Production Linked Incentive (PLI) scheme.

However, S&P expresses optimism, noting initial signs of momentum in private sector investment. 

The agency observes that government infrastructure initiatives and a revival in the housing sector are encouraging private investments in related industries such as steel and cement.

The PLI scheme has shown success in sectors like electronics and pharmaceuticals, with solar photovoltaic manufacturing and advanced carbon composite batteries expected to attract significant investments in the coming years. 

S&P anticipates continued growth in industrial investments across both traditional and emerging sectors.

As India navigates its economic recovery and future growth, the role of private sector investment appears increasingly critical, according to S&P's analysis. 

The report underscores the need for a broad-based recovery in corporate investments to complement government efforts and household spending.

(KNN Bureau)