Finance Ministry Urges Private Sector to Boost Investment, Cites Growth Potential

The Ministry of Finance has called for increased private investment to counter external risks to economic growth, while emphasising the resilience of the Indian economy and its steady growth outlook.

In its February Monthly Economic Review, the Department of Economic Affairs said domestic private capital formation, driven by India's solid fundamentals, will be a key growth driver in fiscal year 2026. It urged industries to recognise the link between investment spending and consumption demand.

The report pointed to factors that could spur consumption, including income tax relief and the Reserve Bank of India's 25-basis-point policy rate cut in February. The Union Budget's focus on long-term reforms under the Viksit Bharat vision further strengthens confidence in India's economic resilience.

On inflation, the report noted a seven-month low in February 2025, driven by easing food prices. Record foodgrain production in 2024-25 is expected to further moderate inflation.

Despite global uncertainties, India's economy grew by 6.2% in the third quarter of fiscal 2025, up from 5.6% in the second quarter. Strong private consumption and an 8.2% rise in core merchandise exports (April-February) contributed to this momentum. Gross foreign direct investment inflows rose 12.4% (April-January), and foreign exchange reserves remain sufficient to cover over 11 months of imports.

Economic growth in the last quarter of fiscal 2025 is likely to be driven by a recovery in exports, increased government capital expenditure post-elections, and demand linked to the Kumbh Mela. The services sector remains strong, with high-frequency indicators like e-way bill generation and PMI indices signalling sustained expansion.

(With PTI inputs)