Letters: Not the sole indicator

With reference to the article, "Investment proposals in reverse gear" by Dilasha Seth (February 24), the headline is misleading. So are the inferences drawn from a number of Industrial Entrepreneurs' Memorandum (IEM) filings and the investment indicated in those IEMs.

The IEM is only an expression of intention, not a firm commitment of investment. The data set quoted by Seth carries the actual investment in a particular year; that investment has been increasing over the years. Actual investment as a percentage of proposed investment indicated in IEMs at 25 per cent was the highest in 2015.

The IEM filings have been decreasing because micro, small and medium enterprises are no longer required to file them. Investment in special economic zones is also not captured in the IEMs.

Other parameters that reflect a growing economy have been ignored in the article. Gross domestic product growth in 2015-16 increased to 7.6 per cent (AE) from 7.2 per cent in 2014-15 and 6.6 per cent in 2013-14. So did the rate of growth of gross fixed capital formation: 5.6 per cent in 2015-16 (AE) from 3.4 per cent in 2013-14 and 4.9 per cent in 2014-15. Foreign direct investment (FDI) equity inflows jumped by 40 per cent during April to December 2015-16 and by 48 per cent in the last 18 months. Today, India is the highest FDI-recipient destination.

The number of IEMs filed and the investment indicated in the IEMs cannot be taken as an indicator, more so an only indicator of investment in the country.

Nagesh Singh
senior economic advisor, Department of Industrial Policy & Promotion

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