Private investment now picking up; capital formation at over 3-year high: DEA Secretary

Department of Economic Affairs Secretary Anuradha Thakur on Sunday said private investment in the country is showing signs of revival amid global challenges with capital formation in the June quarter of the current financial year growing at its fastest pace in more than three years reported news agency PTIWe have seen with dismay that private investment is not picking up but now the results are beginning to show Investment is once again leading growth Thakur said at the Kautilya Economic ConclaveShe noted that private companies are committing to new projects especially in sectors such as power data centres and metals Banks are also lending more to industry large and medium enterprises and micro and small businesses she addedFDI investmentHighlighting that the gross foreign direct investment FDI inflows in the country stood at USD 97 billion in FY26 she said said the momentum has continued in the current financial year as well with India attracting gross FDI inflows of around USD 30 billion in the April to June quarter this yearMeasures can be announced but credibility that our country has earned is one that is gained through sustained efforts she said emphasising the importance of a consistent and prudent fiscal disciplineWe have followed this path through steady reform prudent macroeconomic management she saidThe Centres fiscal deficit has come down from a high of 92 per cent of GDP just fivesix years back to a budgeted 43 per cent this year and the fiscal anchor is moving in tune with global trends towards a declining debttoGDP ratio she addedFundamentals remain strongThakur further said the recent rating upgrades by multiple agencies strong forex reserves inflation targeting and nonperforming assets NPA at multidecadal lows reflected the robust fundamentals of the economyShe said these are the essential foundations for any country seeking to borrow affordably when capital resource is scarce and expensiveNoting the signing of several free trade agreements FTAs in the last few years she said this indicated the durability of Indias international economic partnerships However she hoped rules governing the game would continue to prevail and that countries would recognise that lasting partnerships built on fair rules worldwide would benefit everyones progress and boost global growthHer remarks come amid the renewed uncertainty in global trade with US tariff measuresAIlinked investment influencing global demand for capitalThakur also highlighted the evolving global capital landscape noting that increasing geopolitical considerations in trade could reduce the efficiency of international flows of goods and capitalWhen trade is organised around security and geostrategic concerns over comparative advantages goods and capital move less efficiently she said adding that trade surpluses and deficits could increasingly become sources of friction and push up the cost of capital globallyShe noted that the investment cycle linked to artificial intelligence AI is also becoming as a key factor influencing the global demand for capitalThe AI investment cycle is not limited to software or computing It requires data centres semiconductors reliable electricity and transmission capacity she said noting that investments in these areas are creating significant additional demand for capital which are increasingly being financed through debtMore investments would mean greater demand for savings while higher borrowing means that financial markets have to absorb a large supply of debt she saidShe said the elevated global bond yields could therefore no longer be viewed through the lens of monetary policy and fiscal deficits as the changing composition of investment and rising capital requirements are also emerging as significant factors shaping financial marketsThere has been a sharp rise in global bond yields in the recent weeks amid the escalating geopolitical tensions that has led to inflationary pressures With inputs from PTI