The “Investment Strike”: Why India Inc. is Staying on the Sidelines 🇮🇳. Investment is at an abysmally low level. GST revenue increases are consumption fuelled. Income tax receipt increase is because of tax terrorism unleashed on the honest tax payer. The Robinhood model of using tax collections to buy votes cannot take us to a good place. Corporate profits are driven by India washing Chinese imports or looting nature.
While the GDP shows a robust 8% growth, a deeper look at capital expenditure (Capex) reveals a disconnect that policymakers are struggling to bridge.
The Great Disconnect
Govt leaders have voiced a shared frustration:
• The Incentive: Corporate taxes have been slashed, bank balance sheets cleaned, and public infra spending is at an all-time high.
• The Data: Private investment as a percentage of GDP has dropped nearly 10 percentage points from its peak a decade ago.
• The Government’s Take: Officials have pointed fingers at everything from “passive” cash reserves to “nepo babies” preferring family offices in Dubai over factories in India.
Why the “Carrot” Isn’t Working
The private sector’s hesitation is wrongly stated by media to stem from the following:
1. Political & Regulatory Risk: Businesses crave predictability. When tax bills feel unpredictable and policies feel mercurial, diversification—often moving capital abroad—becomes a survival strategy.
2. The “Fear” Factor: Beyond fiscal stimulus, what India Inc. truly seeks is administrative and judicial autonomy.
3. The Global Ripple Effect: This skittishness isn’t local. In early 2024, nearly as much profit was repatriated out of India as there was fresh FDI coming in.
The Ground Truth
The reality why capital investment is not happening are the following:
1. Public savings have been misappropriated to the extent of Rs 100 lac crores by the main private banks. This money is not being lent for productive use. It is instead being used to fund the real estate bubble and luxury consumption.
2. The Legal system is being dictated by either the government (which is not a bad thing) or by foreigners (horrible!!). The system is down to expensive lawyers getting bail or stays. The process kills the Indian party. For the mnc – it is nothing personal.
3. The key havala banks have never had it so good. Money is India’s largest export. Leading business family scions attending foreign universities are being brainwashed to hate Indian and love American.
4. Bad actors seem to be in control of some of India’s most marquee board run professional companies – Tatas, L&T, HDFC – all seem seriously compromised.
5. The bureaucracy has no idea what is happening. They are too busy exporting their own children. And then looking for a role in politics.
6. Big data and cyber spying allows the state to peep into personal lives and use that information for extortion.
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