Businessmen talk positive in public, but not putting their money on ground, says Rajan

Rajan, former RBI governor, on September 7 identified a pick-up in private investment as an important requirement to improve health of the economy Speaking at the launch of his book, he said more than positive statements about the economy that Indian entrepreneurs make, what matters is their investment on the ground in India.

“A measure of the health of our economy is private investment and despite what our businessmen and women seem to be saying in public, they are not putting their money on the ground, they are not building plants,” said Rajan.

“The question is whether it is demand or supply? And I would say it’s a little of both, but certainly there is very little demand for new big investments.”

As a proportion of GDP, private investment in India has declined. Gross fixed capital formation as a percentage of GDP in the first quarter of 2017-18 was 29.8% as compared to 31% in the corresponding period of the previous year. Rajan said that India’s greatest strength was its open society. In future, this openness will be our greatest strength, he added. “It will be our greatest economic strength in the future because as we move to a service idea-based, invention-based economy you need that kind of society in order to people to feel comfortable living it, comfortable in producing ideas. So, it would be extremely silly and shortsighted of us to lose that.”

Source: Times of India