Lok Sabha Question No. 3165 (UNSTARRED), answered on 2018-01-05
Subject: Share of Investments in GDP
Ministry: FINANCE
Asked by: A.P. JITHENDER REDDY

Government of India Ministry of Finance Department of Economic Affairs

## LOK SABHA

## UNSTARRED QUESTION NO. 3165

TO BE ANSWERED ON JANUARY 5, 2018

## SHARE OF INVESTMENTS IN GDP

3165. SHRI A.P. JITHENDER REDDY:

Will the Minister of FINANCE be pleased to state:

- (a) the details of the share of investments in India's Gross Domestic Product (GDP) since the year 2014;
- (b) whether share of investment in GDP has steadily declined over the years, if so, the details thereof and the reasons therefor; and
- (c) the steps taken/proposed to be taken by the Government to increase the share of investment in GDP?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PON RADHAKRISHNAN)

- (a)  &  (b)  As  per  the  data  available  from  Central  Statistics  Office,  investment  rate,  measured  as  gross  capital formation as a share of GDP, declined from 34.4 per cent of GDP in 2014-15 to 33.3 per cent of GDP in 2015-16 (the latest year for which data is available). Available institution-wise details, as given in Table, show that the decline in fixed investment from 2014-15 to 2015-16 is mainly on account of household sector, which declined by almost 2 per cent of GDP, whereas the fixed investment by public sector increased. Fixed investment rate (measured as a share of gross fixed capital formation as a ratio of GDP) declined from 30.4 per cent in 2014-15 to 27.1 per cent in 2016-17.

| Table: Investment Ratios as a percentage of GDP   | Table: Investment Ratios as a percentage of GDP   | Table: Investment Ratios as a percentage of GDP   | Table: Investment Ratios as a percentage of GDP   |
|---------------------------------------------------|---------------------------------------------------|---------------------------------------------------|---------------------------------------------------|
|                                                   | 2014-15                                           | 2015-16                                           | 2016-17 (PE)                                      |
| Gross Capital Formation                           | 34.4                                              | 33.3                                              | NA                                                |
| Public sector                                     | 6.8                                               | 7.5                                               | NA                                                |
| Private corporates                                | 13.3                                              | 13.0                                              | NA                                                |
| Household sector                                  | 12.8                                              | 10.9                                              | NA                                                |
| Gross Fixed Capital Formation                     | 30.4                                              | 29.3                                              | 27.1                                              |

Note: NA- Not available; PE- Provisional Estimates    Source: Based on data from Central Statistics Office

- (c)  Encouraging  domestic  investment  and  enterprise  is  one  of  the  focus  areas  of  the  Government.  The complementarities  built  around  the  flagship  Make-in-India  programme,  including  comprehensive  measures  for improving  the  ease  of  doing  business,  Skill  India  and  Digital  India  initiatives;  encouragement  to  budding entrepreneurial talent under the Start-up India and Stand-up India initiatives; and, an investor friendly ecosystem for business  and  investment-related  clearances  and  compliance;  comprehensive  reforms  in  the  foreign  direct investment policy and concrete measures for infrastructure sector are expected to encourage domestic enterprise. Government had also announced various investment promotion measures in  the budget  2017-18  which, among others, include, lower income tax for companies with annual turnover up to Rs 50 crore, allowing carry-forward of MAT credit up to a period of 15 years instead of 10 years at present, push to infrastructure development by giving infrastructure  status  to  affordable  housing,  higher  allocation  to  highway  construction,  and  focus  on  coastal connectivity.  For  highways  development,  the  Bharatmala  Pariyojana  has  been  launched.  The  government  has announced a phased program for bank recapitalization, which is expected to encourage banks to enhance lending. The  introduction  of  the  Goods  and  Services  Tax  has  provided  a  significant  opportunity  to  improve  growth momentum by reducing barriers to trade, business and related economic activities.