A trend is beginning and early signals indicate that it may be here to stay. For two consecutive quarters — October-December 2006 and January-March 2007 — private investment in industry has beaten government investment. This has happened after a gap of seven years. The last time private investment was higher than government investment was in the quarter ended June 1999.

In an indication of investment confidence, outstanding private investment in industry surpassed outstanding government investment by 28 per cent according to the latest data released by the Centre for Monitoring the Indian Economy (CMIE). Outstanding investments are those investments that have been announced, proposed or are under implementation, implying that they will lead to the availability of productive capital for the economy in the near future.

Since September 1999, outstanding private investments have been lower than government investment. The difference between private and government investments has grown from 14 per cent in the December 2006 quarter to 28 per cent in the March 2007 quarter. In the quarter ending March, private ownership of outstanding investments exceeded government ownership by Rs 3,74,045 crore.

This is partly due to a 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 financial year 2006-07. Sluggish government investments added their bit to it.

Government investment growth in mining, irrigation and services showed signs of slowing down as growth in mining investment fell to 30 per cent in 2006-07 from 81 per cent in 2005-06; in services the growth fell to Rs 44,200 crore in 2006-07, an increase of only 9 per cent over the previous period compared to Rs 1,26,119 crore in 2005-06, which was an increase of 33 per cent.

... contd.