New Delhi: The International Monetary Fund (IMF) has highlighted India’s sluggish private investment growth in its latest India Article IV Consultation Report, said Congress MP Jairam Ramesh in a statement on Thursday.
Citing the report, which dedicates an entire section to “Reigniting Private Investment in India,” Ramesh said that it raises concerns about declining corporate investment, foreign direct investment (FDI), and employment trends.
As per the IMF report, private corporate investment has been weaker than historical trends, with nominal investment growth slowing from 21 percent in 2022-23 to 13 percent in 2023-24.
A major concern is the declining share of machinery and equipment investment in GDP, which affects industrial expansion.
Furthermore, manufacturing capacity utilisation reached only 75.8 percent in July-September 2024, with most firms expecting existing capacity to suffice for the next six months.
This reflects a broader slowdown in consumption growth, as lower consumer demand leaves businesses hesitant to invest in expansion, he said.
FDI has also failed to meet expectations, Ramesh said in a statement while referring to the IMF report. “India’s global FDI share dropped from 6.5 percent in 2020 to 2 percent in 2023, with the IMF attributing this decline to an inconsistent trade policy. While India maintains an open-door approach toward China, it follows protectionist policies for other countries. This has discouraged foreign investors, who face uncertainty about access to both domestic and export markets.”
The Congress leader emphasised the need for a three-pronged strategy to revive private investment: boosting mass consumption and wage growth, ensuring stable and predictable economic policies, and restructuring trade policies to protect domestic industries while integrating with global supply chains.
The IMF’s findings highlight a growing gap between economic rhetoric and reality, reinforcing concerns about the need for structural reforms to restore investor confidence in India’s economic future, said Ramesh.