The Indian Economy Since 1991, 2nd Edition

15

Foreign Direct Investment in India in the Post-1991 Period

Sharat Kumar and A. Srija

15.1 Introduction

Consumption (comprising private consumption, public consumption and exports) has been observed to be the main driver of growth in India in the recent years. A question may, therefore, be asked: what is the need for investment? Well, consumption contributes to the growth as long as there are unutilized capacities. Once the full capacity has been reached, a further increase in the production or supply is possible only when fresh investments are made and additional capacity is created. Typically, the rule of full capacity and utilization may not apply so strictly to agriculture, where good or bad weather conditions may hold the key to a higher ...