India’s economic growth stubbornly refuses to accelerate at the desired – and perfectly feasible – rate. The most important reason for this failure is that private corporate investment continues to remain sluggish, in spite of the generous tax cuts in September 2019 and the PLI cash handouts. The Modi Govt’s own survey indicates that private sector capital expenditure may well be 25% lower in 2025/26 as compared to the previous year. Informed analysts have opined that while banks are willing to lend, companies are unwilling to borrow since the investment environment is not seen to be conducive to expansion.

Growing demand creates a climate for investment. There are undoubtedly global uncertainties but within India it is clear that demand growth is being held back because of stagnant wages, a distorted GST structure, and sharpening of inequalities. Amidst a widespread consumption slowdown, there is no systematic incentive for corporates to invest in the creation of additional capacity.

Investment is as much a financial decision as it is influenced by psychological factors. These factors have come into greater prominence because of the havoc created by tax terrorism, the gaming of the system by a favoured few, and a feeling of fear and insecurity in the larger corporate world.

Ultimately, the investment depression is the inevitable consequence of the Modi Government’s policies of suppression and oppression.