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LATEST NEWS UPDATES | What’s ‘stopping’ India Inc from investing in India? -Vivek Kaul

What’s ‘stopping’ India Inc from investing in India? -Vivek Kaul

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published Published on Sep 24, 2022   modified Modified on Sep 25, 2022

-Newslaundry.com

The finance minister asked a valid question. Here’s the answer.

Last Tuesday, finance minister Nirmala Sitharaman asked India’s corporate honchos why they were not investing in the Indian economy.

“I want to hear from India Inc,” she said, “what’s stopping you when countries and industries abroad think this is the place to be.”

This is a valid question. In this piece, we will try and piece together why India Inc, as corporate India is often clichély referred to, is not investing in the Indian economy and what are the reasons behind the same.

Let’s start with looking at the investment to gross domestic product (GDP) ratio over the years. GDP is a measure of the economic size of a country during a particular year.

Figure 1 makes for very interesting reading. The overall investment in the Indian economy in 2021-22 stood at 28.6 percent of the GDP, which is similar to the levels seen in the early 2000s, two decades ago. In fact, the investment to GDP ratio peaked nearly one and a half decades ago in 2007-08 at 35.8 percent of the GDP, and has followed a largely downward trend ever since.

Clearly, the problem of low investment in the economy isn’t a recent phenomenon related to the spread of the Covid pandemic. It has been around for a while and is more than a decade old.

Let’s dig a little deeper. The overall investment in the economy consists of household investment, private sector investment, and public sector investment. Let’s first take a look at household investment.

Please click here to read more.  


Newslaundry.com, 24 September, 2022, https://www.newslaundry.com/2022/09/24/whats-stopping-india-inc-from-investing-in-india


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