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Domestic Investments

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Domestic Investments

June, 2011

Investment Scenario

Union Budget 2011-12 clearly supports existence of private investments in the Indian economy to take the GDP to 9 per cent in 2011-12. The measures that aim at reviving the private investments include directions given to institutions like National Bank for Agriculture and Rural Development (NABARD) and Small Industries Development Bank of India (SIDBI) to provide financial assistance to the micro, small and medium enterprises (MSME), introducing ‘sugam’ to reduce the compliance burden on small tax payers who fall within presumptive taxation, freeing small businesses (with turnover of upto US$ 0.132 million) from formalities of audit, further liberalisation of interest subvention on housing loans and creation of ‘India Microfinance Equity Fund’ of US$ 22 million.

India’s economic prospects

Gregory Ko, ING Investment Management-Asia Pacific, has remained optimistic on investor sentiments in India for the FY2012 in his recent interview. Considering robust economic recovery as the theme of investment, he believes that sectors including IT, metal and energy would show bright streaks of performance in the coming months.

Around 18 per cent of the Indians have rated their individual finance as excellent and 66 per cent of them consider it to be good for the calendar year 2011, a study by marketing research firm Nielsen has revealed. Confidence in the economic growth has made Indians optimistic about their personal finances, said the study.

Furthermore, 61 per cent of Indian investors believe that Indian markets do better than global indices in 2011. More than four out of five investors think that the Indian markets would outperform global peers over the course of this decade, according to a Franklin Templeton Global Investor Sentiment Survey.

India as an investment destination

Karnataka has emerged as the most preferred investment destination among the top 20 investment attracting states as per 'Associated Chambers of Commerce and Industry of India Investment Meter (AIM). With a share of 9.1 per cent in domestic investment plans in April-September 2010, the southern state clocked a year-on-year (y-o-y) growth of 73.8 per cent and attracted US$ 85.49 billion of investments.

Following Karnataka, Uttar Pradesh recorded a y-o-y growth of 75.5 per cent, attracting huge investments of US$ 45.14 billion during the period.

Jharkhand acquired the third spot owing to its possessions of rich mineral resources like coal and iron-ore along with cheap manpower. Having a share of 6.3 per cent in total investments during the reported period, the state’s planned investments stood at US$ 44.03 billion. Gujarat and Orissa were fourth and fifth on the radar, by attracting attracting investment plans worth US$ 43.19 billion and US$ 42.10 billion, respectively during April-September 2010-11.