Reviving India’s household savings and investments should be the budget’s top concern

Falling investment rates have cast a shadow on claims of a buoyant and dynamic India made by successive governments. Before it came to power in 2014, the ruling Bharatiya Janata Party (BJP) had made it a political issue. Since then, it has been less than successful in restoring investments to levels seen in the first decade of the century.

The government now argues that investment rates have finally begun to rise. While this may be true, current rates are still low compared to financial year 2012, or even earlier years. In constant price terms, real investment as a share of GDP fell even more sharply and barely seems to be recovering.

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