At a time when investment has declined from a peak of 38% of GDP in FY08 to 30.8% in FY15 and 28.1% in H1FY16, finance minister Arun Jaitley has nudged private sector to give up caution and make investments. While private investment has failed to pick up from the slump of FY12-13, much of the fillip came in from public investment. The Mid-year Economic Review shows aggregate capital expenditure of the Centre and states has gone up by 0.5 percentage point of GDP in H1 FY16—indicating a real expenditure growth of 25%. However, public sector investment is relatively smaller source of capital formation and reviving private investment growth will be a critical challenge for the government.
