Weighing in on India’s Investment-led Revival

Editorial Analysis for Civil Services - Weighing in on India’s Investment-led Revival

Weighing in on India’s Investment-led Revival

For Prelims

Golden Quadrilateral:

  • It is a national highway network connecting most of the major industrial, agricultural and cultural centres of India.
  • It forms a quadrilateral connecting the four major metro cities of India, viz., Delhi (north), Kolkata (east), Mumbai (west) and Chennai (south).
  • The Golden Quadrilateral project was launched in 2001 as part of National Highways Development Project (NHDP).
  • The completed Golden Quadrilateral passes through 12 states and a union territory:
  • Andhra Pradesh, Uttar Pradesh, Rajasthan, Karnataka, Maharashtra, Gujarat, Odisha, West Bengal, Tamil Nadu, Bihar, Jharkhand, Haryana, Delhi


Pradhan Mantri Gram Sadak Yojana

  • Under the Ministry of Rural Development and was launched on 25th December, 2000.
  • Phase I of the project was 100% Centrally sponsored scheme, while cost of Phase II & and Phase III was shared between centre and states.
Its Objective:
  • To provide connectivity, by way of an all-weather road to unconnected habitations.

Gross fixed capital formation (GFCF):

  • Defined as the acquisition of produced assets (including purchases of second-hand assets), including the production of such assets by producers for their own use, minus disposals.

For Mains

Current concerns about investment led development model

  • Depreciation of Rupee and Rising inflation in the domestic market are reducing the trust of Investors.
What India can learn from past experiences
  • After the Asian financial crisis of 1997, the government of India initiated public road building projects, in the form of the Golden Quadrilateral and the Pradhan Mantri Gram Sadak Yojana.
  • These culminated in a high growth rate of 8-9% annually.
  • Between 2014-15 and 2019-20, the shares of agriculture and industry in fixed capital formation/GDP fell from 7.7% and 33.7% to 6.4% and 32.5%, respectively.
  • Services’ share rose to 52.3% in 2019-20 compared to 49% in 2014-15. The rise in the services sector is almost entirely on transport and communications.
  • Share of manufacturing sector in the investment ratio fell from 19.2% in 2011-12 to 16.5% in 2019-20.
  • As per the National Accounts Statistics, industrial output growth rate fell from 13.1% in 2015-16 to a negative 2.4% in 2019-20.
The Silver lining
  • According to the June edition of the Ministry of Finance’s Monthly Economic Review, the fixed investment to GDP ratio recovered to 32.5% in 2019-20 from a low of 30.7% in 2015-16 (figure).
  • For healthy domestic output growth, there is a need for balance between “directly productive investments” (in farms and factories) and infrastructure investments.
  • Instead of focusing on improving India’s ranking on World Bank’s Ease of Doing Business Index, the government can emphasise on boosting investment and domestic technological capabilities.
  • Increase budgetary allocations for fixed capital creation.


 Source The Hindu

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