Six years after COVID paralysed India's economy, Union Finance Minister Nirmala Sitharaman is making a confident claim: the private sector has finally shown up — and it was government spending that pulled it in. Speaking at the C.D. Deshmukh Lecture 2026 in New Delhi on 6 August 2026, Sitharaman pushed back against a persistent criticism that dogged the government for the better part of two years after the pandemic — that public investment was doing all the heavy lifting while private capital sat on the sidelines. 'The private sector has come forward,' she said flatly. 'It is the public expenditure that we kept undertaking all these years, with a lot of confidence that the Indian economy would benefit from it, that has actually helped the private sector come forward.'

The Bet on Borrowing for Assets

At the heart of her argument is a fiscal philosophy the government has championed since the Union Budget 2021-22: borrow not to fund subsidies or consumption, but to build assets. Roads, railways, ports, power — the logic being that infrastructure creates demand, which eventually de-risks private investment enough to crowd it in. 'When you borrow money, you borrow it for creating assets and you spend it on asset creation,' Sitharaman said. 'This has its rewards, both for you and for the larger public.' The approach was seeded even earlier, through the Atmanirbhar Bharat package of 2020, which combined targeted capital spending with production-linked incentives to jolt manufacturing and infrastructure back to life after the pandemic's body blow.

From Scepticism to Risk-Taking

What makes Sitharaman's remarks notable is the timeline she is implicitly defending. For roughly two years post-COVID, the government absorbed the criticism that it was propping up growth numbers through its own balance sheet while corporates hoarded cash. The Finance Minister's rebuttal: that patience was the strategy, not the problem. Private players, she argued, are now 'taking risks and investing so that they can benefit from the growth that India is seeing.' The sequencing, in her telling, was always intentional — public confidence first, private capital to follow. The C.D. Deshmukh Lecture — named after India's first RBI Governor and former Finance Minister — is one of the more substantive annual forums for economic policy thought in the country, making it a deliberate platform for a statement of this weight. The next test of whether the crowding-in thesis is holding will come with quarterly private investment data and the contours of capital expenditure in the next Union Budget. The government's credibility on this argument now rests on those numbers delivering.