Public investment has started increasing since 2003-04, reversing a long-period of declining trend that began in mid-1980s. Since 2003-04, private investment has also witnessed a large rise (Chart 2). Thus, it is apparent that higher public investment may crowd-in private investment, leading to a virtuous circle.
In view of this, it is important that the current fiscal consolidation process needs to be persevered with so that higher public investment is possible, which may further attract larger private investment.