Skip to content
September 22, 2023   Academy | Blog | Community
Subscribe to ForumIAS
September 22, 2023 | Subscribe
ForumIAS Blog
ForumIAS Blog
  • Resources and Guides
    • Guides – For UPSC IAS Civil Services Preparation
      • IFoS Guide
      • Interview Preparation guide
      • Guide : Indian Polity for UPSC Civil Services Examination
      • GUIDE : Indian Economy for UPSC Prelims & Mains Examination
      • Guide : Environment for Civil Services Examination
    • Yojana and Kurukshetra Summaries for UPSC IAS Examination
    • Constitution of India
    • Bills and Acts Tracker for UPSC IAS Examination
    • Government Schemes and Programs
    • Species in news
    • International Organizations in News
    • Index, Reports and Summits in News
    • Defence Exercises in News
    • Geography related articles in News
    • History and Art & Culture articles in News
    • Personalities in News
  • Current Affairs
    • Current Affairs- Main
    • Subject-Wise News
      • History News
      • Polity News
      • Economy News
      • Environment News
      • IR News
      • Society News
      • Disaster News
      • Social issues News
      • Geography News
      • Security News
      • S&T News
      • Agriculture News
    • Factly for Prelims
    • Monthly Current Affairs
  • Prelims
    • Prelims 2023 Study Material- Learn with ForumIAS
    • UPSC IAS Prelims Study Material – Archive
    • Prelims Guidance
      • UPSC Booklist
      • Story of Minal Karanwal
      • How To Clear Civil Services
      • Abhishesk Surana Rank 10
    • Prelims Previous Year’s Questions
      • UPSC prelims question paper
      • Subject-wise PYQs
    • Prelims Question Bank
    • Static Material for Prelims
      • Polity Guide
      • Environment Guide
      • Economy Guide
    • Factly Current Affairs
      • All Factly Articles
      • Factly-Indian Economy
      • Factly-Environment
      • Factly-IR
      • Factly-Science and Technology
      • Factly-Bills and Acts
      • Factly-Schemes and Programs
    • Important CA Topics
  • Buy IAS Books
  • Enquiry Form
  • Free Daily Initiatives
    • 7PM Editorial
    • Must Read News Articles
    • 9 PM Current Affair Brief
    • Prelims Marathon
    • Mains Marathon
    • 10 PM Daily Quiz
    • Factly for UPSC Prelims
    • 9 PM Articles List
    • Factly Articles List
  • PYQs and Ques. Bank
    • Prelims/Mains PYQs
    • Mains Question Bank
      • Mains Question Bank and Answers-1
      • Mains Question Bank and Answers-2
      • Mains Question Bank and Answers-3
    • UPSC Mains PYQs- Paperwise
      • UPSC PYQs (GS-1 )
      • UPSC PYQs (GS-2)
      • UPSC PYQs (GS-3)
    • UPSC Prelims PYQs- Subjectwise
      • Ancient/Medieval History
      • Art & Culture
      • Economy
      • Environment
      • Geography
      • International Relation
      • Modern History
      • Polity
      • S&T
      • Social and Schemes
    • Prelims Question Bank
    • Indian Economy Quiz/MCQs bank
  • Interview
    • Interview – Main Page
    • Interview Process
    • Myths About Interview
    • Board Members Profile
    • Interview Transcripts
    • Common Questions
      • Hobby Based Question
      • Sports Based Question
      • State Based Question
    • Important articles
  • Downloads
    • EPIC/Factly magazine
    • Weekly Current Affairs PDF For UPSC
    • Monthly Current Affairs For UPSC PDF Download
    • Compilation Archive
    • Official Answer Key
    • UPSC Syllabus
      • UPSC Prelims Syllabus
      • UPSC Mains Syllabus
    • UPSC Previous Year Papers
      • Prelims Paper
      • Mains Paper
    • Economic Survey 20-21
  • Toppers
    • Toppers Strategy
      • Prelims Strategy
      • Mains Strategy
      • Interview Strategy
    • Topper’s Testimonials and Test Copies
    • Motivation
      • Motivation Articles
      • Articles by Newayn
  • Miscellaneous
    • Careers
    • Announcement
    • Contact Us

Public Investment in India

Posted on July 18th, 2017 Last modified on July 30th, 2017 CommentsViews : 6.5k

Context: Sluggish global growth should prompt India to look inward at augmenting public investment to spur demand. Introduction:

  • Hyperglabalisation has been used to describe the dramatic increase in international trade witnessed for about a decade and a half from early 1990s up to the global financial crisis of 2008.

What is Public Investment? Public investment is investment by government

  • To provide basic resources such as water, sanitation which private sector can’t deliver. This leads to higher productivity and better living Standard.
  • To boost growth and provide infrastructure to private sector for more investment.
  • Public investment shapes choices about where people live and work, influences the nature and location of private investment, and affects quality of life.
  • Public investment can boost growth and provide the right infrastructure to promote private investment.
  • Poor investment choices wastes resources erode public trust and limit growth opportunities.

Statistics related to Public Investment:

  • Public investments by central, state, local government and PSEs saw 21 per cent rise in 2015-16, record growth in last two decades, while private investments (households and corporate) contracted 1.4 per cent year-on-year, the worst performance
  • Public investment represents 15% of total investment (public and private) in the OECD.
  • Public investment represents 3% of GDP in the OECD
  • 50% of public investment in the OECD countries is directed to education and economic affairs.
  • Public investment dropped by almost 8% annually since 2010 on average in the OECD.

Problems of public investment:

  • The impact of public investment on growth depends significantly on the quality of governance.
  • Local governments lack the awareness on how to make the best use of investments.
  • National, regional and local governments will need to invest more efficiently.
  • Agricultural performance has been poor since the boom of the 2003-08 phases and the pace of infrastructure growth by public investment has slowed.

Importance of public investment:

  • In India, rapid growth is underpinned by a substantial increase in investment, which now stands at around one-third of GDP. Much of this increase has come from private sources, reflecting gradual relaxation of the shackles on the business sector since the early 1980s.
  • But the public sector continues to play an important role.

  • Public investment is essential to boost growth in Asia’s third-largest economy when private investment remains weak
  • Public investment can enhance an economy’s productivity for a substantial period of time, as it clearly done in Ethopia.
  • It can also catalyze private investment, and there is some evidence that this has happened in India in recent years.
  • The potential benefits of public investment are not limited to developing countries. In fact, today it may be the advanced economies of North America and Western Europe that stand to gain the most from ramping up domestic public investment.
  • Public investment in infrastructure like roads, dams, power plants, etc is an indispensable driver of economic growth has always held powerful sway over the minds of policymakers in poor countries.
  • In Africa, Ethiopia is the most important success story of the past decade. Its economy has grown at an average annual rate exceeding 10% since 2004, which has translated into significant poverty reduction and improved health outcomes.

Private investment:

  • Private investment has played a central role in accelerating growth in India since the mid-1980s when India began liberalizing its economy.
  • Private investment has slumped in the last three years leading to a slowdown in economic growth and its revival is vital for accelerating India’s growth rate on a sustained basis.
  • India also has a huge public infrastructure deficit and declining public investment.
  • The banking sector faces a huge problem of non-performing loans (NPLs), some of which emanate from stalled infrastructure projects. As a result, credit to the private sector has slowed down hurting private investment. Corporate investment peaked in 2007-08 at around private investment is based on expectations of profits

Conclusion: The role of public investment is critical as it helps build public capital needed for the provision of basic services but it also helps draw-in more private investment.

  • Public investment must be increased and much of the increase must come from investment by the state and central government – not just by the public sector undertakings. In a situation when private investment is not forthcoming, public investment has a role only as a source of aggregate demand but also as catalyst. Recognising the diminished tempo of globalization, India’s economic policymakers must address the growth of the domestic market, which is the demand for goods and services emanating from within the country.

    Sharing is Caring:

    Facebook0
    WhatsApp0
    Evernote0
    More
    Sharing is Caring:
    Facebook0
    WhatsApp0
    Evernote0
    Telegram0
    Print Friendly and PDF
    Published July 18, 2017By ForumIAS
    Categorized as NATIONAL/INTERNATIONAL & SOCIAL

    Post navigation

    Previous post

    GST impact on the infrastructure sector seems to be mixed bag

    Next post

    9 PM Daily Current Affairs editorials – July 18, 2017

    Buy IAS Books

    1. Click here to Buy IAS Books →

    Prelims Study Material

    1. Prelims Study Material- Learn with ForumIAS →

    Testimonials and MGP Copies

    • [Download] – SANDEEP T CSE Rank 764 (UPSC CSE 2022) – Sample MGP (Optional) Test Copies
    • [Download] – YASH VISHEN CSE Rank 647 (UPSC CSE 2022) – Sample MGP (Optional) Test Copies
    • [Download] – BORKAR KETKI NARENDRA CSE Rank 666 (UPSC CSE 2022) – Sample MGP (Optional) Test Copies
    • [Download] – SIDDHARTH SINGH CSE Rank 650 (UPSC CSE 2022) – Sample MGP (Optional) Test Copies
    • [Download] – V SOILEMTHANG VAIPHEI CSE Rank 619 (UPSC CSE 2022) – Sample MGP (Optional) Test Copies

    Most Popular Articles

    1. How to crack IAS in first attempt →
    2. IAS Rank 1 Anudeep D Testimony & Copies →
    3. Fighting Depression in Times of UPSC Preparation ( & Corona ) →

    Strategy And Motivation :

    • Toppers Strategy to Clear CSE
    • Sachin Gupta Rank 3 CSE 2017
    • Rajarshi Shah Rank 81 CSE 2017
    • Life at LBSNAA
    • Rank 54 CSE 2018
    • Suman Sourav Mohanty Rank 9 CSE 2016
    • Sumit Rai Rank 54 CSE 2018
    • Political Science Optional Strategy
    • Avoid Exhausting Attempts in CSE

    Preparation Guides

    • Indian Forest Service Preparation Guide
    • Myths about IAS
    • Guide : How to crack IAS without exhauting attempts
    About ForumIAS

    ForumIAS is India’s leading Online website for UPSC IAS Exam Online Preparation and guidance. At ForumIAS, we have a dream. Our dream is to make its members achieve their IAS dream. Today thousands of aspirants have joined the elite services such as IAS, IPS, IFS, IRS and other central and state services with the right inputs provided by ForumIAS. Take a look at our IAS Toppers

    Guides by ForumIAS

    Polity | Environment | Economy | IFoS Preparation Guide | Crack IAS in first Attempt | Interview Preparation Guide

    About

    • About Us
    • Work With Us
    • Our Mission
    • Credits
    • Team
    • Privacy Policy
    RSS Error: A feed could not be found at `https://forumias.com/threads/feed.xml`. This does not appear to be a valid RSS or Atom feed.

    Reach Us

    • Queries: ravi@forumias.com
    • Academy Support: helpdesk@forumias.academy
    • Admissions Enquiry: admissions@forumias.academy

    Our Initiatives

    • Must Read News Articles
    • Prelims Marathon
    • Mains Marathon
    • Toppers Interview
    • Preparation Strategy
    • 9 PM BRIEF
    • Buy IAS Books

    Site Links

    • Discussion Forum
    • ForumIAS Academy
    • Blog
    • Portal ( Deprecated )
    • FAQ

    Visit Us At

    Forum Learning Centers

    #Delhi - 19, Pusa Road, 2nd Floor, IAPL House, Opposite Metro Pillar 95-96, Karol Bagh, New Delhi-110005, View Google Map Location

    #Delhi - Mukherjee Nagar - ForumIAS Learning Center - 862, Banda Bahadur Marg, First Floor, Dr. Mukherji Nagar, Near Batra Cinema, Delhi 110009. Landmark : Above Octave, Next to Burger Express View Google Map Location

    #Patna - 2nd floor, AG Palace, E Boring Canal Rd, Patna, Bihar 800001, View Google Map Location

    #Hyderabad - 1st Floor, SM Plaza, RTC X Rd, Indira Park Road, Jawahar Nagar, Hyderabad, Telangana 500020, View Google Map Location

    #Gurgaon - Forum Learning Centre, Property No. 894, Ground Floor, Saraswati Vihar, Chakkarpur, Near MG Road Metro Station, Sector-28, Gurgaon, Haryana. View Google Map Location

    CIN No.: U80904DL2018PTC338126 | GST No.: 07AADCF4830D1Z0

    © ForumIAS Blog. Designed & Developed by Stellar Digital Pvt. Ltd.Privacy & Terms of Use