India’s private sector investments are coming back on track, according to Nirmala Sitharaman, Union Minister for Finance and Corporate affairs. “They are coming. Last year, or the year before that, I would have said that no private investments are happening. But after reducing corporate income tax in October 2019, it was only reasonable to think that private investments will improve, and in the 2020 post-coronavirus period, one had to wait and watch,” Sitharaman says in an exclusive interview with Fortune India.
“In various reviews that we held in different towns in India, core sector (representatives)—steel, cement makers—told me they are looking at expansion of capacities. Real estate has also been seen clearing inventories,” she says. Sitharaman believes several companies cleared their debts and paid back banks after the reduction in the corporate tax rate as they saved on tax. With their burden lightened this year, they are expanding capacities.
Recalling her recent interaction with representatives of the real estate sector in Mumbai, the minister says various factors – including the state government’s decision to reduce stamp duty – are helping the real estate sector clear inventories. “When I was in Mumbai, some representatives of the real estate industry themselves told me that in case of a complex where two or three towers were built and about 300 flats were up for sale, 260 bookings happened in two days. When real estate moves at this pace, its impact will also be there on the core products, steel and cement and other things," she adds.
According to the minister, the reduction in the corporate tax alone is not the reason for this revival. “The demand is spurring,” she says.
The minister is bullish on near-term prospects of new-age industries, start-ups, gig operators, tourism industry operators, etc. “This capacity increase has an immediate impact as it gives jobs and also gives value addition to those assets that are being used for serving those sectors. Restaurants, home stays, small hotel properties, all of them are going have an increase in valuation as business is putting its money in these areas. So, private investment is finding its way,” she says.