Investment in Infrastructure in India : Two Issues [ Investment – Output Relationship and the Ownership of the Project]

Abstract

This paper attempts to examine two main issues related to investment in infrastructure in India, One is the investment - output relationship and other is the ownership of infrastructure project. The study observes that the share of infrastructure investment in GDPhas increased during 1970-71 to 2007-08 both in money terms and in real terms. But the importance of various infrastructure investment has under gone a change over a period of time. The study examines direction of causality between investment and output, through Granger causality test, after testing for stationarity and cointegration, both in .money terms and in real terms, both at aggregate and disaggregate level. The results on the direction of causality differ with respect to various infrastructure investment and GDP,both at current price and at constant price. The ownership of various infrastructure projects have been examined for 1999 and 2009. It is found that of time, the share of private sector in total investment has increased over a period of time ir all types of projects except irrigation.