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

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.

A comrade in culture and controversy: Yao Wenyuan’s revolutionary legacy

By Harsh Thakor* This year marks two important anniversaries in Chinese revolutionary history—the 20th death anniversary of Yao Wenyuan, and the 50th anniversary of his seminal essay "On the Social Basis of the Lin Biao Anti-Party Clique". These milestones invite reflection on the man whose pen ignited the first sparks of the Great Proletarian Cultural Revolution and whose sharp ideological interventions left an indelible imprint on the political and cultural landscape of socialist China.

Concerns raised over move to rename MGNREGA, critics call it politically motivated

By A Representative Concerns have been raised over the Union government’s reported move to rename the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), with critics describing it as a politically motivated step rather than an administrative reform. They argue that the proposed change undermines the legacy of Mahatma Gandhi and seeks to appropriate credit for a programme whose relevance has been repeatedly demonstrated, particularly during times of crisis.

Swami Vivekananda's views on caste and sexuality were 'painfully' regressive

By Bhaskar Sur* Swami Vivekananda now belongs more to the modern Hindu mythology than reality. It makes a daunting job to discover the real human being who knew unemployment, humiliation of losing a teaching job for 'incompetence', longed in vain for the bliss of a happy conjugal life only to suffer the consequent frustration.

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.

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).

From jobless to ‘job-loss’ growth: Experts critique gig economy and fintech risks

By A Representative Leading economists and social activists gathered in the capital on Friday to launch the third edition of the State of Finance in India Report 2024-25 , issuing a stark warning that the rapid digitalization of the Indian economy is eroding welfare systems and entrenching "digital dystopia."

School job scam and the future of university degree holders in West Bengal

By Harasankar Adhikari The school recruitment controversy in West Bengal has emerged as one of the most serious governance challenges in recent years, raising concerns about transparency, institutional accountability, and the broader impact on society. Allegations that school jobs were obtained through irregular means have led to prolonged legal scrutiny, involving both the Calcutta High Court and the Supreme Court of India. In one instance, a panel for high school teacher recruitment was ultimately cancelled after several years of service, following extended judicial proceedings and debate.

India’s Halal economy 'faces an uncertain future' under the new food Bill

By Syed Ali Mujtaba* The proposed Food Safety and Standards (Amendment) Bill, 2025 marks a decisive shift in India’s food regulation landscape by seeking to place Halal certification exclusively under government control while criminalising all private Halal certification bodies. Although the Bill claims to promote “transparency” and “standardisation,” its structure and implications raise serious concerns about religious freedom, economic marginalisation, and the systematic dismantling of a long-established, Muslim-led Halal ecosystem in India.

Search This Blog