Finance Minister Nirmala Sitharaman said easing uncertainty in India-US relations could help reverse the wait-and-watch stance of global investors, linking recent gains in the rupee and equity markets to the phone call between Prime Minister Narendra Modi and the US President.
Speaking in an interview to The Indian Express, Sitharaman said global capital today responds less to domestic fundamentals and more to geopolitical signals, and India may now be receiving the right ones.
“My observation post this call between the Prime Minister and (the US) President is that there should be a change in the direction of where the funds will go. Surely I expect it to flow towards India.”
Markets respond to signals, not fundamentals alone
Sitharaman acknowledged a widespread narrative that net foreign inflows into India have softened despite strong macro fundamentals.
“All numbers are fine, rating upgrades happened, not by one but several agencies, so you expect the funds to flow this way. But it’s clear from what’s happening, that they’re waiting for some other signal from somewhere else.”
She pointed to strong interest from long-term global investors.
“Countries like Norway, Canada are showing keen interest in their pension funds and their larger sovereign funds to come here.”
However, she said some large North American fund managers remain cautious.
“There are some in North America, big fund managers, who wait and watch to see which way the trend moves, and then they take a call.”
Was there an India-US overhang?
Asked directly if concerns around India-US ties weighed on investor sentiment, Sitharaman responded cautiously but did not dismiss it.
“Maybe a reason. May not be the only reason but maybe a reason.”
She said the rupee and equity markets covering “some lost ground” after the PM-US President call was a telling indicator.
Growth estimates ‘realistic’, not conservative
On the Budget’s nominal GDP growth projection of 10 percent, Sitharaman rejected the charge of conservatism.
“I think I have been realistic… We’ve not overshot nor we’ve been conservative. Even this year, it was very realistic.”
She added that the private sector is gradually shifting away from passive investments.
“The passive income attraction is probably receding and people are getting to come in to invest.”
Capex implementation is government’s strong point
Responding to concerns over execution, Sitharaman said implementation is closely monitored at the highest level.
“The last mile is monitored even by the Prime Minister himself in his PRAGATI meetings.”
She argued delays often stem from state-level resistance.
“There can be states which are a bit laidback… politically finding it not prudent for them to go along with the scheme because the benefit might go to Modi ji than themselves.”
Competition, concentration and regulatory scrutiny
On market concentration in sectors like cement and infrastructure, Sitharaman said regulators are empowered to act.
“If there are practices which are indicative of monopoly or collusion, the Competition Commission is well within its right to investigate.”
She was responding amid a probe ordered by the Competition Commission of India into IndiGo.
AI, jobs and market volatility
On fears triggered by new AI tools, including those from Anthropic, Sitharaman played down the idea of AI as a singular market risk.
“Several others are influenced by larger strategic considerations, not just commercial considerations.”
She said the government’s focus is on applying AI to solve problems, not obsessing over job displacement.
States’ debt, freebies and fiscal discipline
Sitharaman said the Centre is nudging states to remain within fiscal limits, citing constitutional powers under Article 293 and referencing litigation by Kerala.
“You borrow, but within your FRBM limits.”
On freebies, her warning was blunt. “Don’t do it with borrowed money because it becomes intergenerational.”
Subsidy reform hinges on data readiness
Explaining why fertiliser subsidies remain high, Sitharaman said reform depends on granular, interoperable data.
“Till these portals talk to each other and traceability is ensured, I can’t even take a call.”
She flagged Digital AgriStack as a foundational reform but said systems are still evolving.
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