India received more than $56 billion of foreign direct investment in 2016-17 and will unveil fresh FDI reforms this year to make investments simpler, top officials said on Saturday.
The reforms come at a time when the government is trying to address the festering problems of banks’ non-performing assets (NPAs) and insipid domestic private sector investments, they said.
Cabinet Secretary P.K. Sinha who attended a high-level meeting to grapple with the banking system’s NPA crisis and the slow offtake of bank credit, termed that the lack of domestic private investments a ‘serious’ issue.
“We have to create a demand spurt,”the country’s top bureaucrat said. “Take the power sector, for example… there is so much capacity that has been created but demand is not increasing. And this applies to many sectors. The government and industry need to think as to what we should do to increase demand.”
“Secondly, there is a credit problem and the NPA problem of banks as money they have lent is not coming back. The government is seriously considering and I am heading, in fact, to a meeting on how to deal with the issue of NPAs. These are the two reasons that private investment is not taking off,” Mr Sinha said at the annual session of the CII.
Tepid private investment
The cabinet secretary was responding to a query from Mahindra and Mahindra managing director Pawan Goenka who said the tepid private investment appetite must be ‘a little frustrating for the government’ when banks are flush with money but have no takers for credit. Mr. Goenka had asked if the Centre had done an analysis on the root cause and solution for the problem.
Department of Industrial Policy and Promotion secretary Ramesh Abhishek said that without factoring in the pending data for March 2017, India had received more than $56 billion of FDI in 2016-17 and a total of $156 billion FDI in the last three financial years.
“FDI is a key to promoting growth and we are working on a number of other FDI reforms to make things even simpler. In the coming year, we will carry out a lot of these reforms,” Mr. Abhishek said, adding that the government’s investment facilitation agency Invest India is currently facilitating investments of about $70 billion through 500 specific deals.
Lamenting the imposition of visa restrictions in ‘one country after another,’ Mr. Sinha said, “We need not worry too much about visa restrictions we will have ample opportunities here in India itself.”
