Slumpville

Advance estimates of national income for 2010-11 brought out by CSO highlight how badly investments have been hit by the slowdown and how they have now decelerated for the third consecutive year, going down from the peak rate of 32.9% of the GDP in 2007-0 to 32% in 2008-09, to 30.8% in 2009-10 and further down to 29.3% in 2010-11.

But what makes the scenario even more depressing is that despite the overall recovery, the pace of deceleration has continued to pick up with the numbers falling by 0.9 percentage points in 2008-09, 1.3 percentage points in 2009-10 and further by 1.5 percentage points in 2010-11. In the case of stocks, which form the second component of overall investments, the trends are fluctuating, which points to the uncertainty faced by business. In fact, the only component of the total investments in the economy that is picking up is the investment in valuables, namely gold and silver, the preferred option in uncertain times, where investments have gone up to 1.9% of the GDP, which is now at an all-time high. Overall investments in 2010-11 are now likely to slump below the 35% mark, a level achieved in the last year of the Tenth Plan.