New Delhi, Dec 21 (IANS) India needs massive investments to boost GDP growth that is hovering around 6 per cent in recent quarters, Commerce Minister Suresh Prabhu said on Thursday.
His comments come at a time when domestic private investments in the country have fallen to record lows.
Addressing the 50th edition of the Skoch Summit here, the Minister said that private enterprises must be encouraged to ensure efficient investments in areas critical for the country's development.
"India needs investments on a massive scale, because more the investments, more the growth," Prabhu said.
He said that investments must be efficient, as poorly conceived and inefficient investments would not yield the desired results.
"We must use capital in the most efficient manner so that capital-output ratio is good. We need entrepreneurs who use capital in an efficient manner and thus boost growth," the Minister added.
Reversing five successive quarters of decline, India's Gross Domestic Product in the second (July-September) quarter of the current fiscal grew at 6.3 per cent, which was higher than the 5.7 per cent growth registered in the previous quarter.
According to experts, the fundamental factor responsible for this situation is the decline in private investments in recent years, both corporate and households, accompanied by the burgeoning non-performing assets, or bad loans, of Indian government banks.
There has been a sharp fall in investment with the gross fixed capital formation rate falling steadily to touch 29.3 per cent in 2015-16 and 27.1 per cent in 2016-17.
Investments by the private sector during 2016-17 grew at 5.8 per cent, recording the slowest growth rate since 1992. The gross domestic savings rate fell from 34.6 per cent of the GDP in 2011-12 to 32.2 per cent in 2015-16.
The top 1,000 non-financial companies made fresh investments of Rs 2.07 lakh crore in 2016-17, which is lower than the Rs 2.9 lakh crore in 2016-17, and all-time high of Rs 5.7 lakh crore in 2013-14.
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