Union Finance Minister Nirmala Sitharaman on Wednesday said the problem of budgeted expenditure remaining unused was often driven by political considerations at the state level, even as she defended the government’s approach to disinvestment, private sector participation, and scrutiny of Chinese investment.
Speaking at BS Manthan, Business Standard's flagship event in New Delhi, Sitharaman said India’s economic indicators were broadly aligned with the Budget’s projections, but challenges remained from global uncertainty and domestic implementation gaps.
Why is budgeted expenditure not fully utilised?
The finance minister pointed to the Centre’s special assistance scheme for capital investment by states as an example, where funds were available but uptake varied based on political factors.
“We've given this special assistance to states for capital investors, which is a 50 year money, given interest free. But in some reform related steps, not even one taker, or in some a few takers in some others, oh, everybody is in,” she said.
Siatharaman added that political narratives often influenced whether states accepted funds tied to reforms. “If they don't think they get a political mileage out of it, they don't want that money… these are factors which are causing this kind of being selective about which one I want, which I don't want,” she said.
“Beyond the point I can't, except for replying in Parliament or going to different states and saying, look, this is for the good,” she added.
What is govt’s position on disinvestment and private participation?
The finance minister said the government’s reform approach went beyond traditional disinvestment and included opening sectors to private participation.
“Look at the way space sector is at the moment, with private participation. Look at the way atomic energy - with small modular reactors - has opened up for the private participation,” she said.
Sitharaman acknowledged that disinvestment remained important but depended on market conditions and other factors. She also noted that implementation took time even after decisions were taken.
“Everything consumes time for even to let go something which you've decided you let go… that's govt for you,” she said.
How is India looking at investments from China?
Sitharaman reiterated that Chinese investments were subject to scrutiny under Press Note 3 and broader security considerations.
“Chinese investment come under Press Note 3. You need to know who the ultimate beneficiary is,” she said, adding that the government examined investments beyond purely commercial factors. “I will be concerned about the ultimate beneficial owner for several non-commercial reasons - who is investing, who will be the beneficiaries.”
Sitharaman also stressed that India cannot follow China’s approach blindly as "our economy has a different set of factors".
At the same time, she said that investment decisions must not compromise sovereignty, especially on taxation matters. “Anything related to taxation is a matter of Indian sovereign authority,” she said.
How does the government view broader reforms?
Sitharaman said tariff rationalisation was a gradual process balancing the interests of domestic producers and importers. “These exercises cannot be at one brush. It has to go item by item,” she said.
The finance minister said global capital flows were influenced by external factors, even as domestic capital availability had improved. “Money available for businesses has actually democratised the base. You have money from Indian domestic money coming into market,” she said.
She added that bilateral investment treaties were being negotiated based on India’s evolving needs and that investment flows were not solely dependent on such agreements.
“Countries have survived and prospered with investment going towards them despite not having BITs (bilateral investment treaties). The world is lots more dynamic today,” she said.
On agriculture, she described the sector as “critical" for India's security, including "national security", touting the agri-stack reforms as transformative.
Congress protests at AI summit inappropriate: Sitharaman
Sitharaman criticised the Congress for staging protest at the recently concluded AI Impact Summit, calling the demonstration "inappropriate".
“What was this demonstration aimed at, and what was the purpose of this? Who are the people who are going to see it there?” she said.
The finance minister said protests should not undermine national efforts. “I want a good, solid, strong Opposition. Question us on everything that we do, but this is shaming Indians,” she said.
Sitharaman added that such actions affected broader national efforts in the AI sector. “This is actually pouring water on the efforts of so many people, who came there to see what they can contribute in the AI field.”
 "BS Manthan: Sitharaman flags fund utilisation gap, cautious on China FDIs")
