ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Investment: On the Upswing

On the Upswing It does appear that after years of stagnating, private investment is now showing indications of a strong upsurge. With the economy growing at over 6 per cent a year since 2003, high capacity utilisation rates, buoyant consumption demand and rising business confidence, investment demand has expectedly gone up. This is evident in the pace at which corporates have been announcing capacity expansion projects and the interest being evinced by foreign investors in India. Though the previous investment cycle in the early to mid-1990s could not be sustained, the situation this time, with lower interest rates and sizeable internal accruals of firms, is considerably different. However, the overall rate of investment has stagnated at between 23 and 24 per cent of GDP through most of the 1990s and well into the current decade until 2003-04, the latest year for which firm data is available. Given that only partial and approximate data are available for 2004-05 and the present year, the period during which private investments have shot up, it would be useful to map the nature, quantum and industries into which the funds are flowing.

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