'Private sector investment can revive economy'
18 July 2012 1:08 AM GMT
The sagging economic growth can be given a boost if the private sector increases its investment as the government is not in a position to increase public spending, given its constraints, said rating agency Crisil.
The private sector, accounting for three-fourths of GDP, will have to script the economic turnaround by reviving investments and raising its contribution to overall growth, Crisil said in its report Why is it critical to revive the private sector?
The agency notes that in the two decades since 1990, the share of the public sector in GDP growth remained stagnant at 6 per cent, whereas private sector GDP growth went up to 7.7 per cent in the 2000s from 5.7 per cent in the previous decade. ‘The private sector's performance during the high growth phase from 2004-05 to 2007-08 was even more impressive, as it logged 9.7 per cent GDP growth per year. Private corporate investments, too, had surged to 17.3 per cent of GDP from 10.3 per cent of GDP during this period,’ Crisil said.
‘If India came out largely unscathed from the effects of the financial crisis, it was mainly due to the impetus from the public sector. During 2008-09 to 2009-10, private sector GDP growth had slipped sharply to 6 per cent from its pre-crisis levels of 9.7 per cent per year,’ the report said.
The private sector, accounting for three-fourths of GDP, will have to script the economic turnaround by reviving investments and raising its contribution to overall growth, Crisil said in its report Why is it critical to revive the private sector?
The agency notes that in the two decades since 1990, the share of the public sector in GDP growth remained stagnant at 6 per cent, whereas private sector GDP growth went up to 7.7 per cent in the 2000s from 5.7 per cent in the previous decade. ‘The private sector's performance during the high growth phase from 2004-05 to 2007-08 was even more impressive, as it logged 9.7 per cent GDP growth per year. Private corporate investments, too, had surged to 17.3 per cent of GDP from 10.3 per cent of GDP during this period,’ Crisil said.
‘If India came out largely unscathed from the effects of the financial crisis, it was mainly due to the impetus from the public sector. During 2008-09 to 2009-10, private sector GDP growth had slipped sharply to 6 per cent from its pre-crisis levels of 9.7 per cent per year,’ the report said.
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