Domestic investment is the only engine of capital creation that still needs to pick up, and banks must recover their loans to help boost private investment, Union Finance Minister Arun Jaitley said on Saturday.
“Public investment over the last few years has picked up significantly,” Mr. Jaitley said while speaking at a seminar on debt recovery. “Falling oil prices have helped us accumulate savings, which we have passed on to customers to keep inflation in check and also have used to increase investments.”
“The second source of capital is foreign direct investment, and even here we are one of the favoured destinations,” he added. “But the domestic investment situation is still challenging. The Indian private sector needs to invest, and to support that you need banks to provide credit.”
However, the stressed balance sheets of the banks have made this difficult, the Finance Minister said.
“If bank money is locked with some defaulters, then it prevents from being used by thousands of others who could put it to productive use,” Mr. Jaitley said, adding that it must be ensured that recoveries take place.