Pvt sector investment shows upward trend

Public sector investments in agriculture and other industries have not kept pace with private investments over the last decade, a CII discus...

Public sector investments in agriculture and other industries have not kept pace with private investments over the last decade, a CII discussion paper on ‘Investment Scenario in India’ has found.

While the share of private sector Gross Capital Formation (GCF) in GDP rose from 13.1 to 17.1 per cent, public sector GCF in GDP fell from 8.8 per cent in 1991-92 to 5.7 per cent in 2002-03.

Similarly, public sector investment in industry fell 10 percentage points, to 23 per cent over the decade ended 2000-01 and came down from 32 per cent to 23 per cent over the same period in agriculture. Electricity, gas and water supply are the only sectors where there was a rise in share of public sector investment in GCF.

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With the share of agriculture in GDP at around 24 per cent, however, the share of agriculture in GCF was only 8.7 per cent in 2001-02 and investments in agriculture as a percentage of GDP were only 1.7 per cent in 2001-02. The paper asserts the need for higher investment in agriculture, particularly irrigation. “There is a need to review policies that have led to diversion of scarce resources away from the creation of productive assets,” it says.

The basic problem in India is that of low saving rate of 23 per cent, which has resulted in low level of investment.