Trends in Consumption, Savings and Investment 1

In this report, the consumption, saving and investment trends in India are analyzed and
interpreted from the years between 2002-2012, and the changes over the years in these three
components are studied. However, before these trends are discussed, it is vital to understand
what exactly these concepts are, what their roles in the economy are, and how they are all
interrelated, if at all they are related.

Consumption
Consumption as an economic function can be described as the total value of the final goods
and services procured by people, aggregated over time and space. It forms the biggest
component of the GDP.
Consumption can be categorized as (i) durable goods like cars and fridges and (ii) non-
durable goods like food, and services such as mechanics.
Moreover, an individual’s position in the income levels of the country plays a role in
determining their consumption structure. The people belonging to the higher income level
spend more and hence, consume more on the basis of their needs, which surpass just their
immediate basic needs.
A higher consumption level has an immediate effect on the GDP of the country – there exists
a positive relationship between the two. Moreover, since the present income [GDP (mp)]
determines the level of consumption, the increase in income will be followed by a further
increase in consumption.
Though higher consumption, essentially results in lower savings, it increases the income level
and hence, improves prospects of future savings. It also influences investment levels in the
economy. Higher consumption results in higher production capitalization utilization. This
generates positive expectations for the future demand and in turn, improves the financial
conditions and investor expectations for investment.

Savings
An individual, firm or nation has two ways to utilise their income – consumption or savings.
It is these savings that result in the accumulation of capital which can in turn be used for
future consumption.
Savings are done by three groups of the economy:
(i) The Public Sector
(ii) The Household Sector
(iii) The Private Sector
The government’s savings are the residue left after its expenses on recurring items are
deducted from the total tax revenue earned. Low or no savings by the government leads to
lower funds available to the government for fixed investment in social or physical
infrastructure.
Households save primarily for two reasons: expected expenses in the future such as
education, cars, houses, etc., and retirement.
Companies’ savings are part of the total revenue earned, after deducting the total expenses.
This part of the profit is not paid to the shareholders, but rather kept aside for future needs
like expansion and growth of the firm, machinery, etc.

Investment or Capital Formation

In an economic point of view, an investment is the production of goods that will be further
used to produce other goods. Investment is more often than not, the outcome of forgoing
consumption. Investment need not always be privately owned, nor do they only have to be
 Trends in Consumption, Savings and Investment 2

physical like machines, bridges, etc. Human capital is also an investment. For example,
investing in education of an individual will result in higher folds of returns in the future.
The next question that crops up is, where exactly do the resources for the investments come
from. Investment can come only from foregone consumption, that is, it can come only from
the savings of three entities broadly:
(i) Private individuals
(ii) Private firms
(iii) The government
Apart from these domestic sources of investment, nations can obtain investment even from
foreign investments in the form of Foreign Direct Investments and Foreign Indirect
Investments.
Investment plays a huge role in the growth of the economy, and it was the sole most
important factor deciding the consumption in the economy. One important function of
investment is to increase the production of capital intensive goods. The consumption of
capital intensive goods and the growth of income are positively related and hence, capital
formation essentially stimulates growth of income, and therefore, leads to the rise in GDP.
Moreover, in Less Developed Countries, investment in infrastructure plays a significant role
in its development as not only does it help introduce newer and more efficient technology to
the producers of the LDC’s, but also creates an opportunity for them to use the latest and
modern technologies in the field to increase productivity, and hence, GDP.
No matter what the investment is, it always reaps a multiplied benefit in the future.
Investment in education results in a skilled and proficient labour force in the country. In
agriculture, it results in more scientific methods being adopted, and so on.

Interrelation between Consumption, Savings and Investment:

When we take into consideration these three economic variables that is, consumption, savings
and investment, we understand that these three are related to such an extent that a change in
one variable can lead to a change in the other two variables, thereby affecting the very base of
any economy. An individual’s consumption behaviour dictates how much of his income he
uses for consumption and how much he saves from it after paying all the stipulated taxes
(disposable income) to the government.
The basic consumption function is written as C=f(Y), which depicts that consumption is a
function of income. On the other hand, we also know that Y=C+S where Y is the income of
an individual, C denotes the amount that an individual utilizes for his own purpose i.e. his
consumption, and S is the amount that an individual saves for future needs. In a general
scenario, increase in the income of an individual also increases in his consumption. However,
this interrelation is not proportionate due to the psychological law of consumption which
states that increase in income leads to increase in consumption and increase in savings as
well. An individual can either utilise his money for directly saving in the financial sector,
which is considered as indirect investment, or for indirectly saving in long term investments
such as Gold and real estate property, which is considered as direct investment. Both these
forms of saving lead to increase in the investment ratio either directly or indirectly.

In any economy, financial intermediaries derive their deposits from Household, private and
public sector. The income saved by these three sectors is kept with financial intermediaries
such as commercial banks in various forms such as temporary deposits, fixed deposits,
purchase of bonds, debentures, etc. These savings are further passed on to the firms in various
forms such as loans for production or investment. These deposits are then given as loans to
industries to invest in their production process by commercial banks. This explains how
 Trends in Consumption, Savings and Investment 3

increased savings also lead to an increase in supply of funds in loanable fund market – a
hypothetical market which brings savers and borrowers together. Increase in the supply of
loanable funds further leads to the reduction of interest rates. This encourages firms to
borrow more money to invest in their firms. Increase in investment leads to increase in the
production which leads to further increase in employments opportunities and increase in
profits earned by a firm. Increase in profits lead to increase in the wages of the workers in the
long term, thereby resulting in the increase of both consumption and savings from their part.
This explains precisely how increase in investment by firms, caused by increase in the
income, leads to increase in the profits earned by the entrepreneur. This in turn increases the
wages of an individual thereby resulting in increase in savings and investment rate.

In this report, we have analysed the changes in these three variables and how it has affected
the Indian economy over the period of ten years (2002-2012).

Consumption in India (2002-12)

The economic performance of a country can be understood to a great extent by the dynamics
of consumption as it is usually the largest GDP component. Consumption is often classified
as household consumption expenditure and government consumption expenditure. According
to World Bank, household final consumption expenditure (formally private consumption) can
be defined as the market value of all goods and services, including durable products such as
cars, washing machines and home computers purchased by households. It also includes
payments and fees to governments to obtain permits and licenses, and excludes purchases of
dwellings other than imputed rent for owner-occupied dwellings. Here, household
consumption expenditure includes the expenditures of non- profit institution serving
households, even when reported separately by the country.
The other part of this is government consumption expenditures. Government consumption
expenditures and gross investment measures the portion of GDP or final expenditure that is
accounted for by the government sector. Government consumption expenditures consist of
spending by government to produce and provide services to the public, such as public school
education, highway constructions or purchases of military hardware.

Consumption
$1,200,000,000,000

$1,000,000,000,000

$800,000,000,000

$600,000,000,000 Consumption

$400,000,000,000

$200,000,000,000

$0
02
03
04
05
06
07
08
09
10
11
20
20
20
20
20

20
20
20
20

20
 Trends in Consumption, Savings and Investment 4

Public Sector and Household Consumption of India

The graph above shows the annual consumption expenditure rate of the government and
household sector which depicts that there is a definite and steady increase in the consumption
levels in the country. There are also undulations which clearly show the effect of the 2008
recession and the resultant inflationary pressure that our economy has to deal with. During
that period, what can be noticed is a pull from expenditure consumption in household sector
preventing people from spending because the prices hiked with increase in global petroleum
products leading to increase in price and reduced wages lead to reduced consumption.

The years 2002-2007 fall under the 10th five year plan wherein the aim was to achieve 8%
GDP growth where we can see the efforts of the government to boost the economy and
achieve the target growth rate. The years 2002- 2007 can be assessed as a period of fairly
stable growth indicated by the steady increase in consumption. The percentage of
consumption in GDP differed through the years indicating that in some years other
components of GDP showed greater improvement as compared to consumption.
Analyzing the pattern of household and government consumption, we find that their
percentage as well as rate of growth varies through the years. The reason for this is that the
government uses various fiscal and monetary policies to control its expenditure as well as the
consumption expenditure of the households. For example, in the year 2003 we can see that
the percentage of growth in household consumption 8.4% compared to 2.5%in 2002. From
this we can infer the growth in purchasing power of the economy. Simultaneously, the growth
in government expenditure that year was 2.8% from -0.2% again indicating a boost in the
economy.

The eleventh five year plan from 2007-2012 was a rough period for the economy and its
effects are relevant till date. Due to the setting in of the global recession and also the
inflationary pressure on one end, the government had to create a tandem between ensuring
growth in the economy while controlling inflation. The inflation lead to the government
having spent large amounts in order to control money flow in the economy as well as provide
various subsidies to support the common man. In the 11 the five year plan there were more
introductions of subsidies provided by the government in primarily petroleum products and
other such subsidies were provided in the agricultural sector.
In the year 2007, 2008 and 2009, the trend of wave line increase and decrease in the
household consumption level is based upon the consumption spending of the government. In
the previous year, the fiscal policies taken or rather approved by the government to control
trade deficits had its effects in household consumption. Even during these years the crowding
out effect that the government created in anticipation of paying off the trade deficits, reduced
the public households to reduce expenditure and created more incentives of saving. However,
the government spending in the year 2008 raised the government anticipation of increasing
prices in the global economy in order to support the industries competing in the global market
with subsidies. The government, in order to have money within the market, controlled the
repo rates and the interest rates to fall by prompting more expenditure by the households,
which had its effects in the price inflation in the country since 2009. The 2008 global
recession increased the prices of the imported goods within the country.
The government was able to spend more due to the factor of FDI inflow within the country
and added to this, was the large inflow of foreign remittances. The reasons which lead to
more inflow are the fiscal change policies with respect to the Indian Rupee appreciating,
leading to again further price inflation within the Indian economy. The Government was now
 Trends in Consumption, Savings and Investment 5

obligated to help the sick industries revive after the global recession, which also pushed the
government to spend more on the public sector, leading to increased expenditure.

Graph displaying the contribution of government consumption expenditure to GDP

Government Consumption %
12.5
12
11.5
11 Government Consumption %
10.5
10
9.5
9
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Graph displaying the contribution of household consumption to GDP

Household Consumption %
66
64
62
60 Household Consumption %
58
56
54
52
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

From 2010 onwards, we can observe that the government is trying to boost the economy after
the crisis period. After a fall in the performance of household consumption in GDP, we can
slowly see an increasing trend. Government expenditure also shows a similar trend. Overall,
the government attempts to revive the economy’s growth by increasing the household
consumption. However, by doing this, inflation must be controlled simultaneously by not
letting out too much money in the economy as the government needs more funds to settle the
current account deficit.

Savings in India (2002-2012)

Savings are done by three groups of the economy:
(i) The Public Sector
(ii) The Household sector
(iii) The Private Sector
The trends in each component of savings is analysed below.
 Trends in Consumption, Savings and Investment 6

Public Sector Savings

As per the Planning Commission’s 12th Five Year Plan, the public sector comprises of:
(i) Central Government
(ii) State Governments
(iii) Central Public Sector Undertakings (CPSUs)
(iv) State Level Public Enterprises (SLPEs)
In order to analyse the trend in the public sector savings across the span of a decade from
2002 to 2012, an analysis looking at a period of years is done.

In the year 2001-2002, though the gross domestic savings and net domestic savings (at
current market prices) grew by 11.8% and 13.3% respectively, it was the household sector
that was the top performer. The public sector, on the other hand, went on to continue its
position as a net dissaver. The year saw the public sector increasing its dissaving by almost
Rs. 10,000 crores. However it should be noted that within the public sector components, the
non-departmental enterprises did show an increase in savings. However this was more than
surpassed and netted out by the increased dissaving on the part of the government
administration. The departmental enterprises were the overall dissavers in this year.
The year 2002-2003 saw a similar increasing trend in the gross and net domestic savings (at
current prices) - both increased by 11.7% and 14.2% respectively. Compared to the previous
year, the net domestic savings has a marked increase in the growth rate by 0.9%. The gross
domestic savings accounted for a 0.7% increase in its proportion of the GDP (mp) to 24.2%.
This year saw a significant decline in the dissaving on the public sector’s part, and it was this
decrease that was responsible for the increase in the overall saving rate.
The public sector dissaving decreased from 2.7% in 2001-02 to 1.9% in the current year. It
should also be noted that the dissavings of the sector, between the years 2001-02 to 2002-03,
went down from Rs. 62,704 crore to Rs. 45, 703 crore. Moreover, dismal performer of 2001-
2002, the departmental enterprises, showcased an increase in their savings from last year –
Rs. 1,023 crore to Rs. 2,339 crore. The non-departmental undertakings once again, showed an
increased savings to Rs. 91,909 crore in the current year from 75,035 crore.

The period between 2002-2005 signified a divergence from the existing trends of dissavings
as was common over the past few years.
One of the main reasons for this positive trend was the marked decline in the dissavings, as
part of the public sector. Across the three years, 2001-02, 2002-03 and 2003-04, the most
momentous development was the trend of decreasing dissavings of the public sector. The
dissavings as a proportion of the GDP started declining from the dismal 2.7% in 2001-02 to
1.1% in 2002-03 and finally to a mere 0.3% in 2003-04.
The year 2004-2005 witnessed the gross domestic savings accounting for 31.1% of the GDP.
This year, however, it was the public and the corporate sector alone that was responsible for
the rise in the savings rate.
It was with the implementation of the FRBMA, that this trend of positive public savings was
further strengthened to 2.2% of the GDP in this year from the previous year’s 1%. It was the
decreased dissavings of the public authorities coupled with the higher savings of the non-
departmental enterprises that resulted in the positive saving of Rs. 69,390 crore, this year.

The increasing trend in Gross Domestic Savings, as a proportion of the GDP, beginning in
the year 2001-02, continued to increase and was at 32.4% in 2005-2006. However, the public
sector had no part in this increase of the savings rate – the household sector and the private
corporates were credited with this increase in the savings rate.
 Trends in Consumption, Savings and Investment 7

The public sector witnessed a decline by -.4 percentage points in the year 2005-2006, thereby
making a negative contribution to the savings rate as compared to the previous year’s positive
contribution. However, the one beacon of light was that the savings of the public sector still
remained positive and did not slip to negative savings, as was the case till the year, 2002-03.
The higher savings by the non-departmental enterprises and the departmental enterprises
resulted in the positive saving of Rs. 71,262 crore, this year.
The year 2006-2007, witnessed savings increasing by 11.3% of the GDP across the span of
the previous five years till 2006. The Gross Domestic Savings was 34.8% of the GDP in this
year. Both the private and public sectors played a role in the increased overall savings. The
public sector savings rose by 5.2% of the GDP this year. The positive trend of positive
savings instead of the previous trend of dissavings played an immense role in the increased
savings rate.
The Gross Domestic Savings largely supported the on-going growth of capital formation as
of the year 2007-2008. In this year, the percentage of the GDP occupied by the Gross
Domestic Savings at the market prices was 37.7%. The public sector’s proportion of this
year’s savings however, was only a 12% - the least among the shares as compared to the 23%
of the private sector and 65% of the household sector. The public sector savings accounted
for 4.5% of the GDP and the sector’s saving rate was 5.0%.

The Gross Domestic Savings at current market prices in 2008-2009 was valued at Rs.
18,11,55 crore which resulted in around 32.5% of the GDP at the current prices in
comparison with the 37.7%, the previous year. The cause of this fall in the GDS rates is due
to the decreased proportion of the public sector along with the private sector. The public
sector saving rates decreased to 1.4%. However, it should also be taken into account that the
NAS redefined its concepts and the changes in trends across the years can be slightly
attributed to the overestimations of the GDS rate in the old series (which were before this
year) by 1.3%.
The year 2009-2010 was in general branded by robust economic growth. The fundamentals
had also gained strength – savings and investments were both up. Gross Domestic Savings
accounted for 33.7% of the GDP at current prices (CSO Quick Estimates).
The public sector accounted for the fall in the savings rate in the previous year and this year,
due to the stativity of the private sector and the subsequent increase in the public sector
savings, the recovery of the savings rate took place. The public sector savings went up to
2.1% in this year from a revised level of 0.5% in the previous year, mainly due to increased
savings by the public enterprises. In the year 2010-2011, the Gross Domestic Savings as a
ration of the GDP (mp) decreased from the previous year’s, 33.8% to the current year’s
32.3%. Surprisingly, this decrease was not attributed to the public sector, but to a decrease in
the savings by the private corporate sector. Due to fiscal consolidation, public savings
recorded a heightened level of savings.
The year 2011-2012, witnessed an overall slowdown in the economy. One of the factors was
a fall in savings not coupled with a corresponding fall in the aggregate demand in the country
leading to a wide current account deficit. The savings rate reached its all-time low in 8 years
in this year at a rate of 30.8%.
The public sector savings as proportion of the total savings this year aggregated to about
6.7%. The public savings have increasingly declined over a span of 20 years, from about 20%
in the 1980s to an average of 3.3% on the 2000s. The share of public authorities in public
savings has gone from positive points, from back in 1980s, to negative points in the 2000s.
 Trends in Consumption, Savings and Investment 8

Household Savings
The heterogeneity that is seen in the household sector, comprising of individuals, non-
government and non-corporate businesses, farm and non-farm business like sole
proprietorships and partnerships and non-profit organisations, has resulted in direct estimates
of the household sector saving not being available to India.

In 2001-2002, the household sector was the highest contributor to the increase in GDS as a
proportion of the GDP to 24.0%. The household sector witnessed an increase in their gross
savings that surpassed the aggregate increase in the total GDS itself. Of the total savings
made by the household, their financial savings increased by 1.8% from the previous year to
19.8%.
The subsequent years of 2002-2003 and 2003-2004 again showcased a good performance by
the household sector. The proportion of the household savings in physical assets as a
proportion of the GDP increased to 13.0% both the years, from 11.4% in 2001-02. However
the proportion of savings in financial assets in the GDP, showed an improvement only in
2003-2004 (11.4%) after having a steady decline from 2001 to 2003.
In 2004-05, the household sector’s contribution suffered a decline due to a slow growth rate
in its savings. The savings growth rate of this sector had slowed down to 5.9%, making a
negative contribution as its proportion of the GDP came down. The decrease in the household
savings in both physical and financial assets was the primary cause of the GDS percentage
point increase of a mere 0.2%, as compared to the 2.4% the previous year.

2005-2006 showed an improvement in the household savings rate so much so, that it was one
of the two components responsible for the increase in the savings rate. As much as 0.7
percentage point of the 1.3 percentage points increase in gross domestic savings rate between
2004-05 and 2005-06 has come from the household sector.
The simultaneous action of two factors on the behaviour of the India: the residential building
construction boom financed through bank housing loans and the progressive maturation of
the domestic markets. The construction boom positively affects the savings in the physical
form whereas the matured domestic markets bring up the financial savings.
There was a distinctive shift in the household portfolio between 2003 and 2006. Physical
savings as a proportion of GDP has declined steadily from a high of 12.4 per cent in 2003-04
to 10.7 per cent in 2005-06. Financial savings, on the other hand, after declining from 11.3
per cent to 10.2 per cent between 2003-04 and 2004-05, more than recovered to 11.7 per cent
in 2005-06.

In 2006-2007 savings of the household sector were stable at 23 to 24 per cent of GDP,
averaging 23.7 per cent during the Tenth Five Year Plan. The physical and financial
components of the household savings also remained stable. The share of the household sector
in gross domestic savings declined from 94.3 per cent in 2001-02 to 68.4 per cent in 2006-07.
In respect of the household sector, the rate of saving has remained at the same level of 22.6
per cent in 2007-08 and 2008-09.
According to the CSO released QE, GDS as a ratio of GDP(mp) declined to 32.3% in 2010-
11 from 33.8% in 2009-10. The household sector contributed to the decline in the GDS by
witnessing a decrease in the household savings in financial assets.
This decrease in the financial savings rate can be partially attributed to: (i) the inflationary
tendencies in the economy, which in turn, resulted in an increased growth of the private final
consumption expenditure instead of personal disposable income (ii) a reduction in real
interest rate.
 Trends in Consumption, Savings and Investment 9

Private Corporate Sector Savings

The private corporate sector comprises of:
(i) non-government non-financial companies
(ii) commercial banks and insurance companies working in private sector
(iii) co-operative banks, credit societies and non-credit societies and
(iv) non-banking financial companies in the private sector.

Since the dawn of the development of the financial system in India, savings have been the
backbone to both domestic and private bodies throughout the economy.
The IMF estimates that almost $600 Billion or 3,000,000 crores are saved throughout the
economic system in India. Only $100 Billion of that gets invested in some form of product or
security.
The rise of the financial services sector gave birth to many innovative yet risky products such
as collateralised debt, money market instruments and derivatives. 2005 onwards saw a
decline in savings function in the private sector. However, while most nations were terribly
affected by the 2008 financial crisis, India, owing to its high savings function weathered the
moment and stood out tall and strong with bold fiscal and monetary policies.
Over the years, there has been a slight drop in the savings rate owing to the increase in
consumerism, debt and changing lifestyles. 2002 to 2012 proved to be the golden decade for
India where it learned to mobilise its savings and park them in much more suitable
investments to grow the wealth of the nation.

In the year 2001-02, while households increased their share of savings, the private corporate
savings increased roughly at half the rate of increase of household savings. Although the
three sectors contributed to the overall growth and improvement in GDP, it should be noted
that the private corporate sector grew, but at a constant rate, and lesser than the other two
sectors. In 2002-03, as a proportion of GDP, there was a marginal reduction in the gross
savings of household and private corporate sectors, which are the mainstay of overall savings
in the economy. The increasing trend in gross domestic savings as a proportion of GDP
observed since 2001-02 continued, according to the new series of national accounts, with the
savings ratio rising from 26.5 per cent in 2002-03 to 28.9 per cent in 2003-04 and further to
29.1 per cent in 2004-05. In 2004-05, the rise in the savings rate was partly contributed to by
the private sector.
Savings by the private corporate sector, reflecting the high retained earnings from their higher
profits, grew rapidly at 24.9 percent to increase its share in GDP from 4.4 per cent in 2003-04
to 4.8 per cent in 2004-05. There has been a continuing upward momentum in the savings of
the private corporate sector for three years. As a proportion of GDP, it increased steadily
from 3.6 per cent in 2001-02 to 4.8 per cent of GDP in 2004-05.

Both private and public savings have contributed to higher overall savings. Private savings
have risen by 6.1 per cent points of GDP over the Tenth Five Year Plan period. It has
increased steadily over this period, though private savings appear to have reached a plateau in
2005-06. The savings from the private corporate sector were particularly buoyant. The
increase in private savings is due to a doubling of the rate of corporate saving over the plan
period.
The years 2005-06 and 2006-07 turned out to be a huge upsurge for the private sector. Private
sector savings dominated the total savings in 2007-08 and were at 33.2 per cent of GDP.
Between 2002-2005, gross saving of the Non-banking Financial Companies (other than
banks, insurance & cooperatives) has been projected at Rs.70,405 crore and Rs.77,126 crore,
 Trends in Consumption, Savings and Investment 10

respectively, in the two scenarios for the years 2007-2012. These figures provide a greater
picture to the growth of the Indian economy.
The gross saving of the private corporate sector has, thus, been projected around Rs.9,57,930
crore and Rs.10,07,215 crore for the Tenth Plan period under the assumption that GDP would
grow by 6.5 per cent and 8 per cent, respectively.

There was a significant slowdown in the growth rate in the second half of 2008-09, following
the financial crisis that began in the industrialized nations in 2007 and spread to the real
economy across the world.
The growth rate of the gross domestic product (GDP) in 2008-09 was 6.7 per cent, with
growth in the last two quarters hovering around 6 per cent. Yet, over the span of the year, the
economy posted a remarkable recovery, not only in terms of overall growth figures but, more
importantly, in terms of certain fundamentals, which justify optimism for the Indian economy
in the medium to long term.
Private sector savings has remained sticky in the range of 30.1% to 31.9% in the last six years
and seemingly the global crisis had no significant impact. The Indian economy is estimated to
grow by 6.9 per cent in 2011-12, after having grown at the rate of 8.4 per cent in each of the
two preceding years. This indicates a slowdown compared not just to the previous two years
but from 2003 to 2011 as well.

Savings of the private corporate sector accounted for 15 per cent of total savings on an
average between 1980-81 and 2011-12. However, during the years 2004-05 to 2011-12, their
share increased to 23.2 per cent. One of the reasons for the increasing share of the private
corporate sector in total savings could be that there has been an increase in the total profit to
output ratio from 3.5 per cent to 7.7 per cent over the years. There has also been a reduction
in certain costs that have contributed to profits and consequently higher savings of the
corporate sector. A slowdown in the industrial sector has an impact on private corporate
savings, as was the case in 2008-09 and again in 2011-12, and the revival of this form of
savings depends on how fast industry recovers.

Among the constituents of the private corporate sector, joint stock companies (financial and
nonfinancial) accounted for more than 90 per cent of the private corporate sector saving in
the current decade and their share reached about 95 per cent in the latter half of the decade.
Correspondingly, share of the cooperative banks and societies including a few non-profit
corporate institutions steadily decreased from 7.8 per cent in 2004-05 to 6.3 per cent in 2006-
07 and further to 5.0 per cent in 2009-10.
The private sector of Indian economy in the past few years has delineated significant
development in terms of investment and in terms of its share in the gross domestic product.
Certain steps taken by the Indian government are acting as the stepping-stone of the private
sector’s continued journey to success, including industrial de-licensing and devaluation that
was implemented previously.

Investment in India (2002-2012)

Investment is done by three sectors in the economy:
(i) The Public Sector
(ii) The Household Sector
(iii) The Private Corporate Sector
The trends in each sector from 2002-2012 are analyzed below.
 Trends in Consumption, Savings and Investment 11

Public Sector Investment

In the period 2002-2005, public investments were squeezed by increases in the proportion of
current transfers to total expenditure. Such transfers include interest payments, subsidies,
pensions and grants, among others.
The share of interest in current transfers which constituted 53.2% in 2000-2001 gradually
declined to 51.5% in 2001-2002, and is budgeted at 49.5% in 2002-2003. The softening of
interest rates in recent years has provided some relief to the exchequer by way of reduced
share of interest payments in total expenditure. 
Among components of current transfers, the share of interest payments increased from 44.2%
in 1990-1991 to 48.3% in 2002-2003, and was budgeted at 48.2% in 2003-2004. Grants to
States, UTs and local bodies which constituted 24.6% of current transfers in 1990-1991
increased marginally to 25.0% in 2002-2003, and was budgeted at 24.8% in 2003-2004.

The softening of interest rates in recent years has provided a climate conducive to investment
growth. Off-take of non-food credit has shown signs of revival. There are indications that the
scope for producing more with the same capital stock through efficiency enhancement is
getting increasingly limited which may lead to investment in fresh capacities.
The improvement in stock-valuation and flurry of activity in primary markets in the latter half
of 2003-2004 reinforce the optimism about the investment outlook. A pick up in the
momentum of industrial growth can boost private investment, which in turn will stimulate
industrial growth, and thereby set off a virtuous cycle.

Taking a look at the period of 2005-2008, the gross domestic investment grew from 27.2% in
2003-2004 to 30.1% in 2004-2005, mainly on account of private investment growing at
19.7%.
In the revised series data, a new item “valuables” covering expenditure on acquisition of
precious metals and stones as a store of value has been included as a component, separate
from public and private, of Gross Domestic Capital Formation (GDCF) on the basis of 1993
System of National Accounts of United Nations.
GDCF at constant prices (base: 1999-2000) as a proportion of GDP is consistently lower than
the corresponding proportion at current prices. But, irrespective of the choice of constant or
current prices as the weights, the direction of change from year to year remains unaltered.  
The lower values of the change in GDCF as a proportion of GDP at constant prices,
particularly in more recent years, may reflect the higher prices of capital goods relative to the
general price level, with growing technological sophistication of the production processes in
the economy in general and manufacturing in particular. At the base year prices, the
composition of GDCF for 2003-2004 and 2004-2005 reveals a faster growth in the public
component than in the private.  Furthermore, there is a faster growth in inventories and
valuables in the latest two years, with Gross Fixed Capital Formation (GFCF) growing at a
lower rate than gross domestic capital formation. 
 Trends in Consumption, Savings and Investment 12

Gross domestic savings as a proportion of GDP continued to improve, rising from 26.4% in
2002-2003 to 34.8% in 2006-2007 with an average of 31.4% during the Tenth Five Year
Plan. The savings-investment gap, which remained positive during 2001-2004, became
negative thereafter. In a modern economy, the excess of domestic saving over domestic
investment suggests a deflationary situation in which demand has not kept pace with
increased capacity. Thus the reversal of the saving-investment balance should be viewed as a
correction of the domestic supply-demand balance, occurring through above normal increase
in demand during 2005-2006 and 2006-2007.
In addition, the growth rate of gross capital formation in different sectors was indicative of
the direction of fresh investment. The rate of growth of capital formation during 2007-2008,
as compared to 2006-2007, increased in mining and quarrying, transports storage and
communication, financing, insurance, real estate and business services and community
personal and social services. However, the growth rate of gross capital formation slowed
down during 2007-2008 in agriculture, manufacturing, electricity, gas and water supply,
construction, and trade, hotels and restaurants.
The fast-paced recovery of the economy underscores the effectiveness of the policy response
of the Government in the wake of the financial crisis.

Coming to the period of 2008-2012 the sectoral investment rate proved to be a useful
indicator of the direction of new investments. While the overall growth of investment in India
was in the range of 15 to 16% per annum during the last few years, it plunged to - 2.4% in
2008-2009 as a result of the external shock-led slowdown.
Growth of investment in the industrial sector has been more than the total investment growth
up to 2007-2008. However, in 2008-2009, this was reversed, when investment in the
industrial sector declined by 17.6% as compared to a decline of - 2.4% in total investment.
Within the industrial sector, the decline was more prominent in the manufacturing and
construction sector. Investment in the unorganized manufacturing sector declined by a
negative 42%, indicative, perhaps, of the difficulty faced by the sector in accessing credit due
to the tight market conditions in the post financial crisis phase.
The rates of investment across sectors indicated the varying levels of impact of the crisis and
recovery. Growth in investment in the agriculture sector, even after the revisions, was strong
in 2007-2008 and 2008-2009, but appeared to have dipped in 2009-2010 with growth at
3.7%.
Investment in two sectors—mining and quarrying and construction—has picked up sharply in
2009-2010.
The level of investment declined in absolute terms in 2008-2009 following the slowdown in
the global economy. Though it did recover quickly in 2009-2010 and 2010-2011, the growth
in gross capital formation, particularly fixed capital formation, has been substantially lower
than had been achieved in 2005-2006 to 2007-2008. The investment rate continues to be
lower than the peak level achieved in 2007-2008.

In 2003-2004 and 2011-2012, the economy registered a growth of 8.2% per annum. In fact,
during this period, the growth rate has never fallen below 6.7% and has been over 8% in six
 Trends in Consumption, Savings and Investment 13

of these nine years. All the three major sectors of the economy, namely agriculture, industry,
and services witnessed higher-than-trend growth rates at 3.9%, 8.0%, and 9.6% respectively.
The growth of this sector has shown the least inter-temporal variations. With the declining
share of the agriculture sector and reasonably consistent growth in the services sector, the
variations in growth rate of GDP are lately being associated with the variations in the
industry sector.

Household Investment
Investment in agriculture, including agro-industry, rural infrastructure, agricultural science,
technology and support services like financial institutions and extension programs, has been
critically necessary to past growth performance. It is probably to be even more necessary for
achieving future international development priorities, particularly the Millennium
Development Goals (MDGs) of halving poverty and hunger by 2015. Investment into all
areas is vital. However, priorities based should be set in line with the needs, risks and returns.
A challenge when deciding future investments is to know and project the long run needs like
ever-changing client needs and urbanization and what which means in terms of investment in
food process and logistics.

Investors predict to progressively benefit from investments within the agricultural sector, not
solely within the short term, but significantly in the medium and long run as well, since
demand for food and different agricultural products is projected to still increase. In addition,
the impact of environmental degradation on agricultural production resulting in supply
constraints is expected to further contribute to an increased interest of investors within the
agricultural sector.

The growth performance of the agriculture sector has been fluctuating across the plan
periods. The agrarian situation saw a downturn towards the beginning of the Ninth plan
period (1997–2002) and the Tenth plan period (2002–07), when the agricultural growth rate
came down to 2.5 percent and 2.4 percent respectively. This crippling growth rate of 2.4
percent in agriculture as against a robust annual average overall growth rate of 7.6 per cent
for the economy during the tenth plan period was clearly a cause for concern. The trend rate
of growth during the period 1992-93 to 2010-11 is 2.8 percent while the average annual rate
of growth in agriculture & allied sectors-GDP during the same period is 3.2 percent.
 Trends in Consumption, Savings and Investment 14

The Eleventh Plan had sought to reverse the deceleration of agricultural growth which
occurred in the Ninth Plan and continued into the Tenth Plan. It has had some success in that
food grain production touched a new peak of 250.42 million tonnes in 2011-12. Agricultural
GDP growth has accelerated to an average 3.9 percent growth during 2005-06 to 2010-11,
partly because of initiatives taken since 2004. As per the latest advance estimate of National
Income released by the Central Statistics Office (CSO), agriculture and allied sectors are
likely to grow at 2.5 percent during 2011-12 as against 7 percent during the previous year at
constant (2004-05) prices.
The Twelfth Plan estimates that with a revision of the farm sector, GDP growth rates for
2010-11 and the expected good harvest in 2011-12, the average growth in agriculture & allied
sectors in the Eleventh Plan may be higher - at 3.3-3.5 percent per year against a target of 4
percent.
Crop Specific Growth
During 2010-11, food grains production was 244.78 million tonnes, comprising of 121.14
million tonnes during Kharif season and 123.64 million tonnes during the Rabi season. Of the
total food grains production, production of cereals was 226.54 million tonnes and pulses
18.24 million tonnes. As per 2nd advance estimates for 2011-12, total food grains production
is estimated at a record level of 250.42 million tonnes which is 5.64 million tonnes higher
than that of the last year production. Production of rice is estimated at 102.75 million tonnes,
Wheat 88.31 million tonnes, coarse cereals 42.08 million tonnes and pulses 17.28 million
tonnes. Oilseeds production during 2011-12 is estimated at 30.53 million tonnes, sugarcane
production is estimated at 347.87 million tonnes and cotton production is estimated at 34.09
million bales. Jute production has been estimated at 10.95 million bales. Despite inconsistent
climatic factors in some parts of the country, there has been a record production, surpassing
the targeted production of 245 million tonnes of food grains by more than 5 million tonnes
during 2011-12.
All the major coarse cereals display a negative growth in area during both the periods except
for maize, which recorded an annual growth rate of 2.68 per cent in the 2002-03 to 2010-11
period. The production of maize has also increased by 7.12 percent in the latter period. In
pulses, gram recorded a growth of 6.39 percent in production during the same period driven
by expansion in the area under cultivation. Soyabean has recorded a high rate of growth in
production in both the periods, driven primarily by expansion in area under cultivation. In
 Trends in Consumption, Savings and Investment 15

fact oilseeds as a group have shown some significant changes in the two decades: the
production growth rate has more than doubled in the decade of 2000s over the previous
decade, driven both by productivity gains (eg. groundnut and soyabean) as well as by area
gains. The average annual growth rates of production and productivity of groundnut during
2000-01 to 2010-11 are abnormally high due to high fluctuations in the production and
productivity during the years 2002-03, 2006-07 & 2007-08. The trend growth rates in the
production and productivity of groundnut during 2000-01 to 2010-11 work out to 1.66 per
cent and 2.63 per cent respectively. Fruits & vegetables have shown a higher growth in
production and area in 2000-01 to 2010-11.

Marketing and Warehouse Facilities

In the context of food grains policy, concern has been raised about simultaneous occurrence
of high food inflation and large food grains stocks in our granaries. It has been argued
(Kaushik Basu, 2011) that, in creating a better food grains policy, it is imperative that the
entire system of foodgrains production, procurement, release and distribution is looked at.
Besides improving storage facilities there is a need to redesign the mechanics of procurement
and release of foodgrains to the market to ensure that the impact on prices is substantial in the
desire direction. An improvement in marketing conditions and encouragement to private
sector participation can be achieved by reforming the Agricultural Produce Marketing
Committee (APMC) Acts. Appropriate changes in the APMC Acts can boost private sector
investment in developing regularized markets, logistics and warehouse receipt systems,
futures markets, and in infrastructure (such as cold storage facilities, quality certification,
etc.) for imports and exports. This is particularly relevant for the high value segment that is
currently hostage to high post-harvest losses and weak farm-firm linkages.
The introduction of the Model Act in 2003 was directed towards allowing private market
yards, direct buying and selling, and also to promote and regulate contract farming in high
value agriculture.

Private Corporate Sector Investment

Private investment is identified as a crucial factor for economic growth at both the national
and the state levels in the Indian economy. A pick up in the momentum of industrial growth
can boost private investment, which in turn will stimulate industrial growth, and thereby set
off a virtuous cycle.
As a result of the softening of nominal interest rates, the real PLR of five major commercial
banks, based on a 52-week average of the WPI general index, had come down marginally
from 9.6 percent in 1997 to 9.0 percent by January 2003. While softer rates of interest have
opened up some fiscal space for fiscal consolidation and enhanced public investment, and
given a boost to housing activity, the benefits of such rates may be expected to fully accrue in
terms of higher private investment over time with an improvement in Gross domestic
investment growing from 27.2 per cent in 2003-04 to 30.1 per cent in 2004-05, mainly on
account of private investment growing at 19.7 per cent.

In contrast to the increase in savings, the increase in investment has been driven by private
investment, which went up by 10.3 per cent of GDP over the five years of the Tenth Five
Year Plan. This improvement was in turn driven by private corporate investment, which
increased by 9.1 per cent of GDP over these five years. Private corporate sector investment
improved from 5.4 percent of GDP in 2001-02 to 14.5 per cent in 2006-07. The upsurge in
private corporate investment has been visible even to the public as a “Capex” boom, and that
is still continuing. Household investment remained close to the plan average of 12.7 per cent
 Trends in Consumption, Savings and Investment 16

of GDP throughout the period, while the public sector investment increased by less than 1 per
cent of GDP over the plan period.

Private investment was found to be highly correlated to the movement of BSE sensex. A
study showed that from 2002-2009, a view at the trend in percentage change in private
investment to that of percentage change in BSE Sensex shows similarity in the trends, with
both peaking during the 2003 period and both taking a dip in 2008 crisis.

Private Sector Investment (% of GDP at current market prices)

Average 2003-04 to 2007-08 12.5
2008-09 11.3
2009-10 12.7
2010-11 12.1

Private Sector Investment (amount in crore rupees), Gross Capital Formation & GDP
Year Private Gross GDP Y in terms Y growth GDP
Investment Capital of GCF rate in Growth
(Y) Formation (%) terms of A Rate (%)
(A)
2008-09 6,36,300 2,000,100 4,158,676 32
2009-10 8,21,000 2,032,400 4,516,071 40 26.97 8.59
2010-11 9,28,500 2,749,200 4,918,533 34 -16.39 8.91
Source: Reserve Bank of India Annual Report

If we look at the raw data for private investment in the last 4 years (2009-12), we can see that
the period 2010-11 attracted the highest amount of investment. However, in terms of Gross
Capital Formation, it saw a -16.39% growth. In spite of that, the GDP saw a higher growth
rate of 8.91% in 2010-11 as opposed to 8.59% in 2009-10 when the Private Investment saw a
growth of 26.97% (in terms of GCF). All things being equal, it can be argued that, India does
not primarily rely upon domestic private investment for national growth.
 Trends in Consumption, Savings and Investment 17

Comparison between Consumption, Savings and Investment

Let us examine the interrelation between these three concepts and how it has influenced
Indian economy over the period of 10 years (2002-2012). The relation between the three
factors has been mentioned in detail in the earlier part of the report. We will now examine the
same with respect to the data of Indian economy.

When we analyse the period of 2002-2005, which as mentioned earlier is the part of 10th five-
year plan, we observe the GDP growth rate of 8%. This naturally resulted in higher incomes,
which lead to increase in all three factors. Let us first consider its influence on financial
sector and how it affected other factors. Due to high rates of GDP, banks reduced their
nominal rates as a result of which private investments increased. Higher capital accumulation
led to increase in profits and higher consumption. Household and private sector together
observed the highest rate of consumption (64% of GDP) in 2002-2005.
Earlier in this paper, we saw how increase in income leads to both consumption and saving.
The proportion of the household savings in physical assets, as a proportion of the GDP,
increased to 13.0% both the years, from 11.4% in 2001-02. However, the proportion of
savings in financial assets in the GDP, showed an improvement only in 2003-2004 (11.4%)
after having a steady decline from 2001 to 2003. In 2004-05, the household sector’s
contribution suffered a decline due to a slow growth rate in its savings. The savings growth
rate of this sector had slowed down to 5.9%, making a negative contribution as its proportion
of the GDP came down. The decrease in the household savings in both physical and financial
assets was the primary cause of the GDS percentage point increase of a mere 0.2%, as
compared to the 2.4% in the previous year. It should be noted that in this period, agricultural
investment in particular observed a downward trend of 2.4% when compared to the previous
year’s investment rate (2.7%). In 2002, private sector observed the saving ratio of 26.5%,
which later increased to 29.1% in 2005. Increased saving resulted in the increase in the
investment rate. Gross domestic investment grew from 27.2 per cent in 2003-04 to 30.1 per
cent in 2004-05.
High rates of investment lead to high rates of profit which ultimately increased government
revenue. As a result of increase in the government revenue, government consumption,
savings and investment increased. 2003 in particular saw highest rates in government
consumption and savings, i.e. 12% of GDP was consumed by government. High amount of
revenue also lead to an increase in current transfers and public investment. Current transfers
rose from 43.0% in 1990-1991 to 58.0% in 2002-2003. Higher revenue also led to softening
of fiscal policies which resulted in the increase of investment in private sector by up to 5.4%.
This increase was the result of high income earned by private sector in 2002. The statistical
data of 2002-2005 of investment and savings of government and private sector explains how
both sectors are interrelated and influence each other, and how both together influence the
elements of consumption and savings.

The period of 2006-2008 observed the GDP growth of 7.2%. As a result of the decline in
GDP, there was also a decrease in consumption rate of private sector. In 2006-2007 savings
of the household sector were stable at 23 to 24 per cent of GDP, averaging 23.7 per cent
during the Tenth Five Year Plan. The physical and financial components of the household
savings also remained stable. The share of the household sector in gross domestic savings
declined from 94.3 per cent in 2001-02 to 68.4 per cent in 2006-07. With respect to the
household sector, the rate of saving has remained at the same level of 22.6 per cent in2007-
08.
 Trends in Consumption, Savings and Investment 18

Consumption rate was only 56.5% of GDP when compared to 65% in the period of 2002-
2005. Although there may be numerous factors which led to decrease in the consumption
rate, decreased GDP growth is definitely one of the factors that influence the consumption
rate of private sector. However, the year 2006-07 turned out to be a huge upsurge for the
private sector. Private sector savings dominated the total savings in 2007-08 and were at 33.2
per cent of GDP. This ratio is clearly far more than what was observed in 2002-05. This may
be the result of the psychological law of consumption. As a result of declined GDP growth
rate, people may have anticipated further decline and concentrated more on savings than
consumption. Household investment remained close to 12.7% throughout the period. One of
the reasons of high investment rate can be the movement of BSE sensex. Private investment
was observed to be 12.4% of the GDP in this period.
Government consumption observed an all time low rate of 10% in the beginning of this
period. However, this rate observed an increase of 11.5% by the end of this period. As far as
savings was concerned, the year 2006-2007, witnessed savings increasing by 11.3% of the
GDP across the span of the previous five years till 2006. The Gross Domestic Savings was
34.8% of the GDP in this year. Both the private and public sectors played a role in the
increased overall savings. The public sector savings rose by 5.2% of the GDP this year. The
ratio of gross investment to GDP is estimated to have increased from 25% in 2002-2003 to
33.8% in 2006-2007. The gross fixed capital formation accounted for more than 90% of the
investment. The ratio of fixed capital formation to GDP is estimated to have increased to
30.6% in 2006-2007.
Although there is no specific factor that could have lead to this pattern of investment and
savings despite low G.D.P growth rate, it is possible that the previous period’s GDP growth
rate (2002-2005:8%) statistics could have caused the investors to overestimate the profit rates
and invest further.

When we look at the period of 2009-2012, we observe that GDP growth rate has increased
from 7%-8.5%. One of the reasons for this could be high rates on investment in the previous
year. Increase in the investment and savings (indirect form of investment) could be the result
of various fiscal and monetary policies adapted by government in 2007 and 2008 to control
inflation rates and increase GDP growth rate. The consumption rate of private sector
increased from 56% in 2009 to 60% in 2012. This may be a result of increase in the rate of
G.D.P. The savings of the private corporate sector accounted for 15 per cent of total savings
on an average between 1980-81 and 2011-12. However, during the years 2004-05 to 2011-12,
their share increased to 23.2 per cent. As mentioned earlier, the period 2010-11 attracted the
highest amount of investment. However, in terms of Gross Capital Formation, it saw a
-16.39% growth. In spite of that, the GDP saw a higher growth rate of 8.91% in 2010-11 as
opposed to 8.59% in 2009-10. Although 2009-10 observed the low rate of investment as the
result of low growth rate in 2007-08, this was corrected with the increase in the GDP growth
rate in 2009-10. It should be noted that there was a tremendous growth in the investment rate
of agricultural sector on 3.5% during this period.
Government consumption increased to 12% in this period. The public sector savings went up
to 2.1% in this year from a revised level of 0.5% in the previous year, mainly due to
increased savings by the public enterprises. In the year 2010-2011, the Gross Domestic
Savings as a ratio of the GDP (mp) decreased from the previous year’s 34.8% to the current
year’s 32.3%. Surprisingly, this decrease was not attributed to the public sector, but to a
decrease in the savings by the private corporate sector. Due to fiscal consolidation, public
savings recorded a heightened level of savings. Although public savings was maximum in
2010-11, it experienced a slowdown in 2012-13. The public sector savings as proportion of
 Trends in Consumption, Savings and Investment 19

the total savings this year aggregated to about 6.7%. The public savings have increasingly
declined over a span of 20 years, from about 20% in the 1980s to an average of 3.3% in the
2000s. The share of public authorities in public savings has gone from positive points, from
back in 1980s, to negative points in the 2000s. Along with the decrease in saving, investment
rates of private sector also went down. The overall rate of growth of capital Formation was
15.6% in 2008-2009 as compared to 13.9% in 2010-2012.

In conclusion, the growth rate of India never fell below 6.7% in the past ten years. Three
major sectors of an Indian economy - public, household and private sector have observed
tremendous growth rates at 3.9%, 8.0%, and 9.6% respectively.

Suggestions
Consumption
Consumption, as discussed earlier is an important component of GDP and hence, boosting the
consumption expenditure is essential to boost GDP. Increased levels of consumption are also
indicative of better purchasing power in the economy and better living standards. It also
increases state revenue as well as the import duties revenue in case of imported goods.

Increasing consumption attracts investors as they calculate the future demand considering the
present demand of people so as to increase GDP. There will also be greater choices for
consumers by doing so.

Increasing consumption needs to be done in tandem with control of inflation. Inflation is

good for the economy as per the consumption concerned, as inflation has a booming effect on
consumption. There can also be greater production prospects. However, an uncontrolled or
steep increase in inflation could bring down household consumption.

The funds for government consumption is sought from taxes and revenue and this can impact
the income and thereby consumption of the households. Therefore, the Government
consumption also needs to be balanced with household consumption such that there are
enough funds with the government to deal with the current account deficit and also to spend
on social n economic infrastructure of the nation. This must be done without affecting the
household consumption, such that there is growth in the economy.

Savings
India has one of the highest savings rate globally, with about one-fifth of the GDP being
saved and later, invested. India has generally relied more on domestic savings than foreign
savings, as compared to the other developing countries.
Although domestic savings has been largely propelling investment in the country, there has
been a recent slowdown in the savings rates – a growing concern that has to be dealt with by
way of conscious and effective policy intervention.

Going by the projections of the public sector savings, as per the Twelfth Plan published by
the Planning Commission, the projected increase can be attained only through a consistent
continuation of the fiscal consolidation processes and a more efficient financial process being
adopted by the public sector enterprises.
 Trends in Consumption, Savings and Investment 20

The Indian banking industry is said to have an excessive use of labour due to the significant
market share of government owned banks. Banks, just like any other firm, need to transform
inputs into outputs at an efficient rate in order to maximize profitability and to survive under
competitive conditions.

Investment
Public investment had 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 (see 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.

References
Consumption
1. India- Household final consumption expenditure. (n.d.). Retrieved July 4, 2014, from
www.indexmundi.com: http://www.indexmundi.com/facts/india/household-final-consumption-
expenditure

2. Household final consumption expenditure (current US$). (n.d.). Retrieved July 7, 2014, from
www.worldbank.org: http://data.worldbank.org/indicator/NE.CON.PRVT.CD/countries?
display=graph

3. Eleventh Five Year Plan 2007-2012. (n.d.). Retrieved July 7, 2014, from
www.planningcommission.gov.in:
http://www.planningcommission.gov.in/plans/planrel/11thf.htm

4. Tenth Five Year Plan . (2002- 2007). Retrieved July 7, 2014, from
www.planningcommission.nic.in:
http://www.planningcommission.nic.in/plans/planrel/fiveyr/10th/10defaultchap.htm

5. (n.d.). . Retrieved July 4, 2014, from:

http://siteresources.worldbank.org/INDIAEXTN/Resources/295583-
1328744264781/India_Economic_Updata_March2012.pdf

6. (n.d.). . Retrieved July 4, 2014, from:

http://dbie.rbi.org.in/DBIE/doc/DBIE_Booklet_Version_2012.2.pdf