ABSTRACT
This chapter attempts to demonstrate that low rates of public and private investment in the Indian economy after 75 years of its independence do not do justice to our lofty aspirations, as it has withheld industrialization, skill formation and generated a per-capita income lower than many comparable economies. India has a very poor track record of investment, public plus private, as a proportion of GDP. In the last decade India’s growth rate has been close to China’s, not due to high rate of investment but curiously because of “productivity” of aggregate investment primarily due to the growth in the service sector. It is the latter which has helped India to compete in spite of abysmal industrial performance. The chapter also argues that the rate of investment in India has not gone hand in hand with trade liberalization policies adopted in the 1990s as it happened in many Asian countries such as South Korea and China. These seem to be some of the major maladies of public policies in post-independent India and all seem to be related directly or indirectly to low public and private investment.
