We are into another general election, and there's no better time to take stock of how successive governments have done in their terms. A new series by CNBC-TV18 tilted, 'It’s The Economy - A Report Card', will have data compiled exclusively by the Centre for Monitoring the Indian Economy (CMIE).
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We kick start with a look at the investment proposals under various government regimes that is a key indicator and driver of growth.
Data compiled by CMIE shows that new investment proposals as a whole have seen a declining trend in the past two regimes, with private sector investments dropping sharply, the public sector investments have inched up marginally, close to 7.6 lakh crore a year, but it hasn't been able to make up for the shortfall in the private investments. The private sector investment dropped almost 35 percent over the last few years from 11.83 lakh crore a year to 7.9 lakh crore a year.
Mahesh Vyas, MD & CEO of CMIE, Ajit Ranade, chief economist at Aditya Birla Group and V Srinivasan, former deputy MD of Axis Bank discussed at length about the statistics.
Vyas said that India do not deserve a mean reversion to some low level that we had 15-20 years ago.
“We require more investments. We have large human capital base, we have low per capita income levels. India needs to grow much faster, India needs to not only sustain the 7 percent growth rate we are seeing right now but we need to see this accelerate even more and take this growth deeper down, have it become more inclusive,” he added.
“However, what I see very important over here, over the last 3 regimes is the very sharp fall in private sector investment", he further added.
“Why has the private sector, which was extremely aggressive in UPA-I; the private sector investments in UPA-I was 8x of what was seen in the preceding 5 years. So there is a big jump in private sector investments in UPA-I compared to its preceding 5 years. Why in the last 5 years have the private sector not done the same thing? Why are they still extremely cagey and their investments are falling? That is the big worrisome factor in the story,” said Vyas.
Ranade said all conditions for investments were ripe during the UPA-I regime. He further added that the size of economy in GDP terms is twice as big in the last 15 years. However, he pointed out that exports have not taken off and the situation needs to be addressed.
“I am not saying all of UPA-I investments can be attributed to precondition but it was building up to be a favourable condition,” he added.
Srinivasan said we have seen significant clean-up and consolidation in the last five years.
According to him, the clean-up process is still work in progress.
Key highlights from the CMIE research:
- Private sector is no longer facing issues that cropped under UPA-II
- Capacity utilization continues to be low
- Industries seem to be facing a problem with demand
- NDA government has been more decisive in taking decisions
- Extensive action against NPAs and on the IBC front under the NDA
- State governments' performance is steadily improving