Ans26.) An important challenge faced by Indian economy has been the slow rate of growth in private investments. It reached 26% of gdp in 2012, but declined thereafter and it is now 20% of gdp. The investment in manufacturing is even lesser because 9% of gdp is invested in construction sector. This restricts India's growth capacity. With capital output ratio of 5, India will need 40% investment to grow at 8% per annum which is the basic need for Viksit Bharat. The steps needed to promote it are
- Better credit availability, specially for MSME. It will help in expanding investment.
- Promotion of infrastructure by both central and state government. It will attract more private investors by reducing cost of production.
- Promoting ease of doing business. It attracts investment by reducing cost of doing business.
- Taking steps to promote demand by generating employment, which will attract investment.
- Expansion of investment subsidy in particular sectors.
Thus it is important for policy making to revive private investment because after 1991, India has done well in both gdp growth and employment generation when private investment has picked up
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