In what can be seen as a positive development for the Indian economy, the total outstanding investment (government and private) has shown a sharp increase since March 2004. Outstanding investment is the sum of announced, proposed and under-implementation investment projects in the country.

Latest quarterly data on outstanding investments (June 1995 to March 2007) reveals that while such investments have been on the rise for most of the period, the rate of growth increased post-2004. The growth rate of over 5 per cent in December 1996 declined to that of over 4 per cent by June 1997. This decline continued with December 1997, witnessing a mere 1.14 per cent growth in investment.

Most of 1998 saw a negative growth rate (a decline in absolute terms), most of which was caused by a sharp decline in the growth of private outstanding investments. By September 1999, this component had become less than the government component in absolute terms by Rs 29,583 crore. Thus, as individual components displayed similar trends, the overall growth rate of outstanding investments ranged from 1.76 per cent to slightly over 5 per cent.

The year 2004, however, marked a significant turnaround with the growth rate going well above 6 per cent, the first time since 1996. By March 2007, growth in investment had touched 12 per cent. The end of 2006 witnessed a sharp rise in private investment, which after a gap of 10 years, exceeded government investment by a whopping Rs 2,41,581 crore.

This sharp rise in private investments can be attributed to the boom in construction, electricity, mining and services investment, by the private sector, which increased by 335 per cent, 119 per cent, 112 per cent and 78 per cent respectively, over the four quarters ended March 2007. Further, sluggish government investment added to that wide gap.

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