Mentors Comments:
Briefly write about the investment decline in India.
Discuss the reasons behind the gradual decline of investment rate in India.
Enumerate the steps required to revive investment for a sustained growth.
Answer:
Investment denotes gross capital formation and is one of the principal growth engines of an economy. Investment rate in India has gradually declined from 38% to 27% over the last decade. Component wise, it is the private corporate investment that is responsible for most of the decline in total investment. Between 2007- 08 to 2015-16, out of the total decline of almost 7 percentage points, private investment contributed 5pp. .
This decline can be examined in light of the following reasons:
The onset of financial crisis in 2008 had disrupted the investment decisions. Many world economies are still struggling with its after effects.
Indian economy has been suffering from twin balance sheet syndrome since 2012, where the ongoing projects are stalled and bankers‟ balance sheet is stressed, leading to rising NPAs and declining credit off-take.
High rate of interests because of high inflation during 2010-13 period also led to delaying of investment decisions. Even though inflation has subsided, investors have remained wary.
Litigations in the PPP projects have also discouraged investments.
Unfavourable perceptions about risks and expected returns, for example retrospective taxation laws create an environment of uncertainty.
Insufficient allocation of resources towards technological advancement and logistics has hampered new investments.
Slow roll out of land and labour reforms.
Household savings and investment rates have been falling.
These roadblocks are reversible in nature and must be addressed to revive the investments for sustained growth.
Following steps should be undertaken in this regard:
Quick recognition and resolution of non-performing assets, in order to address the “Twin Balance Sheet problem”.
Recapitalization of public sector banks to recoup their credit making capabilities.
Time bound resolution of insolvency cases, as envisioned and mandated by the Insolvency and Bankruptcy Code
Capacity building and adoption of fixed deadlines for implementation of further changes in the GST programme
Speedy labour and land reforms to further improve ease of doing business. A predictable and stable taxation regime, which gives investors a clearer vision to make decisions.
Increase public investment in infrastructure sector, creating employment. This would pull in private investment, while increasing money supply at the same time.
Make appropriate changes in investment models to make investment attractive for investors, like HAM model.
Renegotiate the PPP projects according to the existing situation, thereby building confidence among investors.
Steps like Make in India, initiatives for quick approvals and clearances, FDI reforms and strengthening bond market for long term financing will further improve investment rate in India. In the long run, it is imperative to create a clear, transparent, and stable tax and regulatory environment to revive and boost investments.
Q1
Hi Kunal
Good intro.
After intro, briefly mention what is the importance of investment in Indian context. That should not be a detailed discussion.
The main body has good discourse in it.
The points are exhaustive and well explained and well presented.
An alternative to your conclusion can be a brief discussion on the steps taken by the GoI in recent times to revive the investment. That will be a more optimistic one
1
Hi Project Osiris
What is investment and what is the importance of it? That should be your intro.
What is the current status of investment in India? That should be your discussion after intro.
Then only your main body of the answer will start.
The main body is discussed in good manner.
Points are decent.
For more inputs and points, read the model answer.
Answer ends abruptly without conclusion.
Q1
Hi Sourav
The discussion is good.
But you need to address two sub headings briefly before discussing the main body.
They are: Why Investment is important in India and What is the current status of investment.
These discussions should be brief and not much explanation is required.
Apart from this, the concluding paragraph should be small.
Whatever you discussed there can be framed in separate subheading called: Steps taken by the government.
Then give brief and optimistic conclusion
Points in the main body are good.
MOJO9731C00A34245397
Hi Mohsin
Good intro.
Do not make graph and diagram when it is not solving the purpose of the answer.
In the main body, do mention the issue of declining household savings.
Good main body.
An alternative to your conclusion can be the discussion on the steps taken by the GoI.
Points are good and explanation decent.
q1
MOJO9731E00D34250209
Hi Murari
You need to address two sub headings briefly before discussing the main body.
They are: Why Investment is important in India and What is the current status of investment.
Rest of the answer is decent.
For more points read the model answer.
Do not try to scramble towards the end for conclusion. That makes the the answer weak in terms of presentation and structure.
Payment ID: MOJO9802W00A98715356
Please review.
Hi Sahithya
Good intro.
But the balance in the main body is poor.
The reason is that your points in 1st part lack depth and you need to give more points.
This is a very important and continuous issue hence you have to expect a question on it. And there are numerous points available for it. So read the model answer for them.
Your 2nd part is well managed and it has all the necessary points.
They are well explained and exhaustive.
You can skip the discussion on “impact on economy”
Good conclusion.
MOJO9728J00A50299555
Hi Amandeep
After intro, briefly mention what is the importance of investment in Indian context.
Very good points in the 1st part.
Similarly points in the 2nd part are also good.
Conclusion needs better ideas.
You can write the recent steps that GoI has taken to revive the investment cycle there and then end on the optimistic note.
Your presentation and structure are good.
The answer has necessary coverage and depth.
MOJO9801U00N04106675, Please Review My Answer.
Hi Vishwanath
Good intro.
The direction of your answer is good.
But you have to improve upon presenting them.
Do not over explain.
When writing in bullet points then try to give as many good points possible. Just a couple of statements are needed to explain them. Secondly, do not make a heading of each bullet points. That takes time and space. Simply write the points and you do not need to put those headings after each point.
Write as many points as you know but write only 1-2 line about that point. It’s always better to cover more points than to write few points in detail.
Good conclusion.
Q1
Hi Avani
Good use of diagram but they should be self explanatory.
Intro is decent.
The main body is good with comprehensive points.
Content wise the answer is decent.
Better conclusion is needed.
You can write the recent steps that GoI has taken to revive the investment cycle there and then end on the optimistic note.
Your presentation and structure are good.