Growth push: Govt seeks to net Rs 1-lakh-crore investments
The government has identified investment prospects worth Rs 1.02 lakh crore across sectors overseen by 23 key ministries and departments, as it seeks to fast rekindle growth impulses through a virtuous cycle of investments and soften the Covid blows to the economy.
An empowered group of secretaries (EGoS), set up in June under Cabinet secretary Rajiv Gauba, has asked all wings of the government to vigorously pursue investment proposals having greater potential of fruition, official sources told FE. Secretaries have been asked to monitor pending foreign direct investment (FDI) proposals and ensure speedy clearances.
According to a DPIIT assessment, the petroleum ministry has the highest potential to draw investments (Rs 15,403 crore), followed by the ministry of electronics and IT (Rs 14,587 crore) and the chemicals and petrochemicals ministry (Rs 14,241 crore).
It has identified a total of 806 investment prospects and shared these with the project monitoring cell of respective ministries last week for further push. Prospects in departments, including steel, housing, heavy industries, commerce, economic affairs, textiles and food processing, are also included in this assessment.
Meanwhile, the department of pharmaceuticals has received as many as 215 applications from investors under the production-linked incentive (PLI) scheme for bulk drugs and another 28 for medical devices, reflecting their attractiveness. The list of eligible beneficiaries will be finalised by February. Incentives under both the schemes total Rs 10,360 crore over five years.
The idea is to end an investment famine that had set in even before the pandemic. Given that overleveraged, Covid-hit domestic private investors have cut down on fresh expansions, the reliance on FDI has risen substantially.
Despite the Covid gloom, FDI inflows in equity grew 15%, year-on-year, in the first half of this fiscal to $30 billion. But a sizable chunk of it was drawn by only one player — Reliance Jio.
Investments remain critical to the country’s resurgence story, as private consumption has been badly bruised by income losses in the aftermath of the pandemic.
Although a contraction in gross fixed capital formation substantially narrowed from 47.1% on-year in the first quarter to 7.3% in the three months through September, it still remained far below trend. Private consumption, meanwhile, shrank at a faster pace of 11.3% in the September quarter.
With the businesses going through the reset phase after the substantial lifting of the lockdown curbs, the government hopes to make a sustained push now to draw investors.
Addressing a virtual round-table of mostly foreign investors, Prime Minister Narendra Modi, in November, promised “whatever it takes” to make India the engine of global growth. He invited the top executives of 20 global pension and sovereign wealth funds that together manage about $6 trillion in assets to be part of the country’s “exciting progress ahead”.
The government in 2019 drastically cut the corporate tax rate to just 15% for setting up new manufacturing units in a bid to spur elusive private investments. But the outbreak of the pandemic dashed its plans.
It made renewed efforts in the aftermath of the pandemic by announcing 13 PLI schemes, covering sectors including telecom, electronics, auto part, pharma, chemical cells and textiles. It pledged investments of close to `2 lakh crore over a five-year period to woo investors and boost domestic manufacturing.