One of the major issue that Indian Economy is facing is lack of Investment in the economy. What are the reasons for the same.? What should be done to improve the situation? (12.5 marks)
With rate of investment continue declining from 34.6% in 2012 to around 27% in 2016, India is facing problem in investment by private sectors which impact growth and employment generation in the country.
Reasons for the low investment in the country are
Policy reasons
1.Unstable policy towards business environment
2.Red tapism
3.Ease of doing business is not good
4.Failure of PPP(public private partnership)
Fund Reasons
1.Problem of NPA(not performing asset)
2.Corporate bond market being not good
3.Funding option for long term investment is not much available.
General Economical Environment
1.General economical environment is not good.
2.Land acquisition issue.
Way to improve
1.Policy improvement - - bankruptcy code implementation, reforming bureaucracy, use of technology in giving contracts etc
2.Funds improvement--resolving NPA and twin balance sheet problem, promoting corporate bonds
3.Reforming stall project like implementing Kelkar Committee report on PPP
4.Continuing encouraging foreign investment in the country.
As well known that investment is the key for economic growth, therefore above steps need to be followed properly to make India grows around 9-10%.
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