To achieve the goal of $5 trillion economy, it is imperative to put primary focus on private investments. Discuss. Also, highlight the steps taken by government to boost private investments.

The GDP of any country is dependent on four engines of growth, viz, consumption, government expenditure, private investment, and trade.

• As per classical economics theories, the savings in an economy turns into investment which turns into growth.
• But as per the recent economic survey, it has been found that the Investments create growth in an economy, which in turn increases the savings, and this forms a cycle.
• Thus, a Virtuous cycle of growth can be started by investment.
• Due to the global slowdown, the investments have come down which has affected the growth rate also.
• Hence, if we want to become a 5 trillion economy by 2025, then there is a urgent need to ramp up private Investments.

Steps taken by the government:

• National agriculture investment fund under MoAFW to create more Infrastructure assets.
• National infrastructure pipeline to pump in 110 lakh crore in 5 year period, with 30% by union, 30% by States, and rest by PPP.
• Relaxing of FPI/FDI/ECB borrowing laws to attract foreign investment.
• Corporate tax rate cut to 22% and only 15% for new manufacturing firms.
• Angel tax cases dropped and Startup India scheme provided for a 4-year tax holiday to the Startups.
• CSR violations are no longer considered as criminal violation.
• FPI surcharge rolled back.
• SEZ, EPZ, etc are being promoted. In addition, skill India, make in India, and assemble in India compaigns are being synergised.
• As money multiplier and the spillover and positive externalities are very large, many organs such as invest India, industry lobbies such as FICCI, CII & ASSOCHAM and remodelled organizations of government such as DPIIT are taking road shows, summits to project “Brand India” at world level.

Way forward:

Above step are being implemented on war footing and will help achieve SDG 8 of decent work and economic growth for all.

Topics: GS-II: Government Policies and Interventions for Development in Various Sectors • GS-II: Development Processes and Development Industry in India • GS-III: Indian Economy Issues Relating to Planning • GS-III: Economic Growth Development