India's investment failed to pick up despite Modi's 4 years' reforms: Crisil

By Rajiv Shah
India's top consulting firm, Crisil, backed by its international partners, Standard & Poor, has regretted that four years after taking over the reins, and despite "a plethora of facilitations and reforms", the Modi government has "not been able to decisively push the investment cycle", insisting, "Investments have become the sore point of the Indian economy."
Crisil, in its report released last weekend, said, "The share of gross fixed capital formation, or fresh investment in the form of plant and machinery, dwellings and other buildings, etc., in GDP averaged 31% in the past four years (fiscals 2015 to 2018), compared with 33.6% in the previous five years (fiscals 2010 to 2014)."
Pointing out that the household sector "was the biggest contributor to investment in fiscal 2012 (share of ~45%)", Crisil said, "Since then, household investment has been on a consistent decline and its share in total investments was ~31% in fiscal 2017." It added, "Purchase of houses is generally the largest part (more than three-fourths) of household investment, so a slowdown in this factor is the key reason for the decline."

Underlining that "private corporate sector-led broad-based investment revival will have to wait", Crisil said, the immediate reason behind this is, being a "pre-election year, uncertainty can dampen/delay private investment." It added, "Election season is generally marked by uncertainties, both regarding change in regime and policy focus. Large investment commitments, especially by the private corporate sector, therefore, may be unlikely".
Pointing out that, because of slowdown in investment, manufacturing in India has failed to pick up, Crisil said, this has happened because of slowdown in domestic demand – both household consumption spending and investment spending – "in the four years through fiscal 2018 compared with the preceding five-year period."
Then, Crisil said, "Most of the slowdown post fiscal 2015 was seen after demonetisation. The cash crunch following demonetisation reduced private consumption growth. Within private consumption, rural consumption was particularly hit as farm realisations wilted during this period."

Slowdown in manufacturing, said Crisil, has also been caused by a fall in merchandise exports, which constitute about 14.4% of total merchandise export growth. It fell "significantly to 3.7% on-year on average in the four years beginning fiscal 2015 compared with 8.7% in the preceding five-year period. The drop came despite an improvement in world GDP growth and export volume growth in this period."
"In value terms", said Crisil, "The fall in India’s merchandise goods was sharper, with average growth between fiscals 2015 and 2018 at -0.2%, compared with 14% between fiscals 2010 and 2014. Within goods exports, manufacturing-related goods have also seen a slowdown in export growth. However, import growth of manufacturing related goods has increased during the Modi government."
Given this framework, suggested Crisil, the Modi government's target of manufacturing sector occupying 25% share in the economy by 2022, is unlikely to be met. To meet this target, it said, "manufacturing will have to grow at least 17.5% on-year, on average, between fiscals 2019 and 2022", while today the growth rate is less than half as much. "Even to raise the share to 20%, manufacturing will have to grow ast least 11% per year", it added.

Comments

Anonymous said…

Modi government's all round performance is failed

May 27, 2018

Anonymous said…

It’s a shrinking economy.

May 28, 2018

Gram sabha as reformer: Mandla’s quiet challenge to the liquor economy

By Raj Kumar Sinha* This year, the Union Ministry of Panchayati Raj is organising a two-day PESA Mahotsav in Visakhapatnam, Andhra Pradesh, on 23–24 December 2025. The event marks the passage of the Panchayats (Extension to Scheduled Areas) Act, 1996 (PESA), enacted by Parliament on 24 December 1996 to establish self-governance in Fifth Schedule areas. Scheduled Areas are those notified by the President of India under Article 244(1) read with the Fifth Schedule of the Constitution, which provides for a distinct framework of governance recognising the autonomy of tribal regions. At present, Fifth Schedule areas exist in ten states: Andhra Pradesh, Chhattisgarh, Gujarat, Himachal Pradesh, Jharkhand, Madhya Pradesh, Maharashtra, Odisha, Rajasthan and Telangana. The PESA Act, 1996 empowers Gram Sabhas—the village assemblies—as the foundation of self-rule in these areas. Among the many powers devolved to them is the authority to take decisions on local matters, including the regulation...

MG-NREGA: A global model still waiting to be fully implemented

By Bharat Dogra When the Mahatma Gandhi National Rural Employment Guarantee Act (MG-NREGA) was introduced in India nearly two decades ago, it drew worldwide attention. The reason was evident. At a time when states across much of the world were retreating from responsibility for livelihoods and welfare, the world’s second most populous country—with nearly two-thirds of its people living in rural or semi-rural areas—committed itself to guaranteeing 100 days of employment a year to its rural population.

From Kerala to Bangladesh: Lynching highlights deep social faultlines

By A Representative The recent incidents of mob lynching—one in Bangladesh involving a Hindu citizen and another in Kerala where a man was killed after being mistaken for a “Bangladeshi”—have sparked outrage and calls for accountability.

When a city rebuilt forgets its builders: Migrant workers’ struggle for sanitation in Bhuj

Khasra Ground site By Aseem Mishra* Access to safe drinking water and sanitation is not a privilege—it is a fundamental human right. This principle has been unequivocally recognised by the United Nations and repeatedly affirmed by the Supreme Court of India as intrinsic to the right to life and dignity under Article 21 of the Constitution. Yet, for thousands of migrant workers living in Bhuj, this right remains elusive, exposing a troubling disconnect between constitutional guarantees, policy declarations, and lived reality.

Policy changes in rural employment scheme and the politics of nomenclature

By N.S. Venkataraman* The Government of India has introduced a revised rural employment programme by fine-tuning the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), which has been in operation for nearly two decades. The MGNREGA scheme guarantees 100 days of employment annually to rural households and has primarily benefited populations in rural areas. The revised programme has been named VB-G RAM–G (Viksit Bharat Guarantee for Rozgar and Ajeevika Mission – Gramin). The government has stated that the revised scheme incorporates several structural changes, including an increase in guaranteed employment from 100 to 125 days, modifications in the financing pattern, provisions to strengthen unemployment allowances, and penalties for delays in wage payments. Given the extent of these changes, the government has argued that a new name is required to distinguish the revised programme from the existing MGNREGA framework. As has been witnessed in recent years, the introdu...

Rollback of right to work? VB–GRAM G Bill 'dilutes' statutory employment guarantee

By A Representative The Right to Food Campaign has strongly condemned the passage of the Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) (VB–GRAM G) Bill, 2025, describing it as a major rollback of workers’ rights and a fundamental dilution of the statutory Right to Work guaranteed under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). In a statement, the Campaign termed the repeal of MGNREGA a “dark day for workers’ rights” and accused the government of converting a legally enforceable, demand-based employment guarantee into a centralised, discretionary welfare scheme.

'Structural sabotage': Concern over sector-limited job guarantee in new employment law

By A Representative The advocacy group Centre for Financial Accountability (CFA) has raised concerns over the passage of the Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (VB–G RAM G), which was approved during the recently concluded session of Parliament amid protests by opposition members. The legislation is intended to replace the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).

Making rigid distinctions between Indian and foreign 'historically untenable'

By A Representative Oral historian, filmmaker and cultural conservationist Sohail Hashmi has said that everyday practices related to attire, food and architecture in India reflect long histories of interaction and adaptation rather than rigid or exclusionary ideas of identity. He was speaking at a webinar organised by the Indian History Forum (IHF).

'Festive cheer fades': India’s housing market hits 17‑quarter slump, sales drop 16% in Q4 2025

By A Representative Housing sales across India’s nine major real estate markets fell to a 17‑quarter low in the October–December period of 2025, with overall absorption dropping 16% year‑on‑year to 98,019 units, according to NSE‑listed analytics firm PropEquity. This marks the weakest quarter since Q3 2021, despite the festive season that usually drives demand. On a sequential basis, sales slipped 2%, while new launches contracted by 4%.

Search This Blog