India’s wait for a revival in private investment has developed the air of a drama by Samuel Beckett

Subscribe to enjoy similar stories.Indian business rarely does exactly what the government wants it to. For the past decade or so, for example, it has obdurately refused to invest as much as officials think it should.Last week, chief economic advisor V. Anantha Nageswaran said that profits for the 500 largest publicly traded companies had grown by over 30% a year since the pandemic, “but still, our overall capital formation rates from the private sector have been disappointing.”Nageswaran is not the only one complaining.

India’s finance minister Nirmala Sitharaman publicly wonders every few months why corporations seem so unwilling to invest. She has repeatedly pointed out that she has lowered taxes, cleaned up banks’ balance sheets, tried to support consumer demand, spent public money on infrastructure—yet is puzzled why companies haven’t responded.The government is right to be worried. After all, if companies don’t invest, the economy won’t expand.

It has correctly identified the biggest roadblock to higher growth — low investment—if not why it exists. The numbers they’re looking at aren’t a state secret: Back in the boom years more than a decade ago, capital expenditure was over 40% of GDP. It’s down by about 10 percentage points on average since then.And that’s including ever-increasing amounts of public investment.

New Delhi, lacking confidence in the corporate world’s appetite for expansion, has felt it necessary to pick up the slack. Consequently, total investment in productive assets dropped by 2023-24 to a decadal low of a third. Growth in recent quarters has been high—around 8%.