While the Indian economy continues to drive along a robust growth path, the private sector has emerged as the leader of this rapid progress. Latest CMIE data reveal that the total investment (announced and under implementation), both Government and private, in India stands at approximately Rs 5,00,000 crore with a project count of over 13,000. The total investment in a country is considered to be one of the key indices of a country’s growth and future prospects.

However, India’s investment growth today is no longer led by the Government. Instead, it is the private sector that is largely contributing to this growth. Among the total number of investment projects (as on October 2007), the private sector has over 7,000 projects to its credit at a total cost of Rs 30,62,567 crore. Out of these, around 3,700 are under implementation while over 4,000 have been announced.

The Government, on the other hand, has around 5,500 projects under its belt at a total cost of Rs 23,41,348 crore. Thus, the private sector’s total investment exceeds that of the Government by more than Rs 7,00,000 crore. This has happened despite certain sectors of the economy being reserved exclusively for the Government.

However, since 1991 liberalisation, dereservation and deregulation have spurred private investment, and unleashed robust growth. Further, the public-private investment differential might be attributable to exceptionally fast growth in the latter rather than a slowdown in the former.

CRISIL director and principal economist D K Joshi believes that the trigger for this massive increment in private investment has been corporate investment. “Even NAS data corroborate the prevalence of this trend of surging private investment. The trend is likely to continue despite a slight slowdown in consumption demand. Private investment will continue to increase at a fast rate, with Government investment merely complementing it. The latter will tend to be more focussed on critical areas like agriculture,” he says.

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