Sanjaya Baru | Budget 2023: Capital strike subdues the ‘animal spirits’

“I would like now to see private investors and private industry in India coming forward with that so-called animal spirits to show that it is possible for India to be one of the fastest-growing economies.” So implored Union finance minister Nirmala Sitharaman, addressing a gathering of business leaders earlier this month. Recognising that private investment was not adequately forthcoming, Ms Sitharaman declared in her 2022 Budget speech that she would now rely on the “virtuous cycle” of kickstarting private investment by undertaking public capital investment that she hoped would help “crowd-in private investment”. So, if Ms Sitharaman wants private investors and the corporate sector to heed her call to demonstrate their “so-called animal spirits” and show that “it is possible for India to be one of the fastest-growing economies”, then she and the government as a whole will have to find ways to end this “capital strike”. The “Rising India” narrative, as I have often written before, was based on the observed trajectory of 7.5 per cent growth during 2000-2010, following the 5.5 per cent annual average growth during 1980-2000 that followed 3.5 per cent in 1950-1980.