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The FM’s call for industrial investment

GS Paper 3 

Syllabus: Indian Economy and issues


Context: Recently, the finance minister has asked industries to invest more in the manufacturing sector. The minister’s statement comes at a time when private investments have remained elusive in recent years or are limited to a few sectors.


What is the current scenario?

  • Gross fixed capital formation is primarily driven by the public sector.
  • The share of manufacturing in the country’s GDP, too, has remained stagnant at about 16-17% for decades now (as against the target of 25%).
  • Demand in consumption is low ( below the pre-pandemic level) but is expected to pick up.
    • As per an online survey, there is high purchase intention for cars and two-wheelers, a diverging trend for property, and moderation for some consumer durables including computers/laptops, refrigerators, and ACs.
  • Household savings intention remains high with 56% of respondents indicating they plan to increase their savings by year-end.


Thus there is greater optimism for economic rebounding and thus FM has called on industries to invest more to reap the benefits of a growing economy.


What is Consumer Confidence Index?

The Consumer Confidence Index (CCI) is a survey that indicates how optimistic or pessimistic consumers are regarding their expected financial situation. If the consumers are optimistic, spending will be more, whereas if they are not so confident, then their poor consumption pattern may lead to recession.

  • CCI is key to economic growth as consumption increases when they feel confident about the present economic situation and their own financial conditions.