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

Finance Minister Nirmala Sitharaman emphasized on Wednesday that public capital should act as a catalyst for private investment, not replace it, while outlining government initiatives to make infrastructure projects more appealing to private investors. The government's disinvestment efforts in 2026-27 have raised ₹52,716.02 crore so far, including ₹31,514.89 crore from Life Insurance Corp. of India Ltd, ₹5,542.36 crore from Coal India Ltd, and ₹4,357.36 crore from NHPC Ltd. Sitharaman, speaking at a seminar in Jaipur on the BRICS New Development Bank's role in mobilizing private capital, highlighted government reforms such as viability gap funding, the hybrid annuity model, credit enhancement mechanisms, infrastructure investment trusts, the National Infrastructure Pipeline, and PM Gati Shakti, a national master plan for multimodal connectivity.

She stressed that sustained public capital expenditure, coupled with structural reforms, has bolstered India's infrastructure ecosystem. The budget for 2026-27 aims to provide new dedicated freight corridors, high-speed rail corridors, operationalization of new national waterways, and a coastal cargo promotion scheme to further attract private investment.

However, Sitharaman noted that infrastructure projects require more than funding; multilateral development banks play a crucial role in de-risking investments, enhancing project bankability, and bolstering investor confidence to enable large-scale private capital mobilization. BRICS economies, major growth engines of the global economy, face challenges in mobilizing private capital due to structural constraints.

The seminar, attended by senior policymakers, multilateral institutions, and private-sector leaders, underscored the importance of partnership among multilateral institutions, national governments, and the private sector to create resilient frameworks for sustained private participation in infrastructure development.