Public Capital Must Catalyst Private Investment, Says FM Sitharaman

Union Finance Minister Nirmala Sitharaman stated on 12 August that public capital must act as a catalyst for private investment rather than a substitute for it, while addressing a seminar in Jaipur on the role of the New Development Bank in mobilising private capital within BRICS member countries. According to reporting from The Hans India and NationPress, Sitharaman emphasized that while BRICS economies remain major engines of global growth, they face deep structural constraints in attracting private capital at scale, making predictable long-term frameworks essential for market confidence.

Core Structural Challenges Facing BRICS Capital Mobilization

The primary obstacle across BRICS nations is not a lack of available funds, but rather an absence of the regulatory conditions required to deploy them safely. NationPress reported that Sitharaman described the core issue during her keynote address on the sidelines of the BRICS Finance Ministers and Central Bank Governors Meeting, which was hosted under India’s chairship.

The challenge is not merely the availability of capital, but the creation of confidence, stability, predictability, and credible long-term frameworks which are essential to unlock sustained private participation across member countries, Sitharaman said, according to NationPress.

To address these gaps, multilateral development banks must step in to de-risk investments and improve project bankability. Anuradha Thakur, Secretary of the Department of Economic Affairs, noted during her welcome address that capital mobilization requires durable institutional frameworks rather than solely favorable economic conditions, as cited by NationPress.

India’s Infrastructure Financing Model and Policy Instruments

Drawing from domestic experience over the past decade, the Indian government has utilized sustained public capital expenditure to build national assets spanning highways, railways, ports, logistics, digital networks, and energy grids. According to NationPress, Sitharaman outlined several specific financial instruments deployed to ensure public spending crowds in private capital rather than replacing it:

• Viability Gap Funding (VGF): Deployed for socially desirable projects that face financial constraints.
• Hybrid Annuity Model (HAM): Utilized in road infrastructure to ensure balanced risk-sharing between public and private partners.
• Credit Enhancement Mechanisms: Applied to improve the overall bankability of infrastructure projects.
• Infrastructure Investment Trusts (InvITs): Established to recycle public capital and attract long-term institutional investors.

Building on these existing mechanisms, the Union Budget 2026-27 introduced targeted measures designed to accelerate private participation. These updates include dedicated rail freight corridors, new high-speed rail lines, the operationalization of additional National Waterways, and a dedicated coastal cargo promotion scheme, as reported by NationPress.

Next Steps for BRICS Financial Cooperation

The Jaipur seminar brought together senior policymakers, multilateral representatives, and private-sector leaders to evaluate the infrastructure financing gap across emerging economies. According to NationPress, the event concluded with panel discussions featuring delegates from various BRICS nations, think tanks, and academic institutions. Whether member countries can successfully translate these discussions into binding long-term commitments will determine the bloc’s capacity to bridge its ongoing infrastructure funding shortfalls.