| INTRODUCTION | | | | order maintenance, international relations, world |
| Addressing to the Indian Economic Summit’s | | | | peace, general governance, epidemics eradication, |
| session, on Tuesday, the 18th of Nov. 2008, the | | | | general health, poverty alleviation, public welfare etc. |
| State Minister of Industry, Mr. Ashwini Kumar | | | | comes under this type of autonomous investment. |
| declared that Rs 500 billion would be invested by the | | | | The remaining portion of autonomous investment is |
| Central Government with public-private partnership in | | | | that which can be (and is generally) given in private |
| infrastructure pertaining projects. According to him | | | | hands in a developed economy. In a developed |
| this investment would lure demand to boost | | | | economy sufficiently a high level of income is |
| economic growth. In the prevailing time when Indian | | | | achieved, the distribution of income is almost equal, |
| economy is under threat of the entrance of world | | | | market is extended and developed, general poverty |
| depression 2008, such type of a big dose of | | | | stands alleviated and cost of production is quite low |
| investment in infrastructure is desirable to barricade | | | | on account of capital based modern technology. |
| against the entering depression. But, the private | | | | Hence, the producers can easily pay for external |
| partnership may hamper the way of receiving the | | | | economies and people can pay for many of the |
| desired results. | | | | general utility services. Therefore, in a developed |
| INDUCED INVESTMENT | | | | economy, the portion of autonomous investment to |
| When talking about investment, it is categorized as | | | | be incurred in the projects like road transport, |
| the induced investment and the autonomous | | | | construction of highways, construction of bridges, |
| investment. Induced investment is that investment | | | | power and electricity, civil aviation, sea transport, |
| which is induced by profit motive in a free enterprise | | | | education etc. can be (and generally is) given in |
| capitalist economy. It produces commodities and | | | | private hands. This portion of autonomous |
| thereby it can be termed as ‘directly productive | | | | investment, being however similar to the previous |
| investment’. Establishment of a productive unit | | | | one (above said true autonomous investment) in a |
| which produces consumption or capital goods comes | | | | developing economy, but thus becomes profit |
| under the category of the directly productive | | | | motivated and is converted into induced investment |
| investment. It changes with a change in (national) | | | | in a developed economy. In other words, this portion |
| income that is why it is also called income elastic | | | | behaves as autonomous investment in a developing |
| investment. Induced investment is incurred especially | | | | economy but is converted to and starts behaving as |
| to produce larger output. | | | | induced investment in a developed economy. |
| AUTONOMOUS INVESTMENT | | | | Therefore, this portion of autonomous investment |
| On the other hand, the autonomous investment is | | | | can be regarded as the convertible investment or the |
| the investment which is not induced by profit motive. | | | | dual investment. |
| It is not sensitive to changes in income. It is also | | | | CONCLUSI ON |
| known as public investment and is incurred in direct | | | | The above concludes that |
| response to inventions and much of the long range | | | | investment can be categorized as the autonomous |
| investment which is only expected to pay for itself | | | | investment, the dual investment and the induced |
| over a long period. Autonomous investment is | | | | investment. The autonomous investment should be |
| generally associated with such factors as introduction | | | | exclusively incurred by the government in both the |
| of new production techniques, new products, | | | | developed and the developing economies and, |
| development of new resources or growth of | | | | similarly, the induced investment should be incurred by |
| population. Autonomous investment generates | | | | private investors in both the economies. As regards |
| favorable environment for production. An | | | | to the dual investment, it should be incurred by |
| autonomous investment is never profit motivated | | | | government in a developing economy and by private |
| and that is why it is always suggested to be | | | | investors in a developed economy. However, a |
| undertaken by government instead of private | | | | partnership of government and private investors may |
| investors. Autonomous investment does not directly | | | | be desirable in case of the dual investment if the |
| produce goods. It creates external economies | | | | economy has entered into the stage nearest to the |
| whereby the cost of production sustained by the | | | | full development. It is similar to the case of the |
| producing firms is lowered. Thus, their profit is | | | | partnership of government and private investors in |
| increased whereby the firms are induced to produce | | | | induced investment in early stages of development in |
| more. In this way the autonomous investment | | | | a developing economy. The Indian economy seems |
| indirectly helps to increase production. Moreover, | | | | to have travelled though a long on the development |
| autonomous investment generates general utility | | | | path but it has not so far achieved such a high stage |
| services to the general public which they can’t | | | | of development which may allow private hands to |
| afford to purchase. | | | | participate in the dual investment. General poverty still |
| DUAL INVESTMENT | | | | persists there, income distribution is highly unequal, |
| Autonomous investment is autonomous only to the | | | | technology is not fully capital based, cost of |
| extent it is free of profit. If this investment is made | | | | production is high, and much more. Therefore, the |
| by private investors they can’t help earning | | | | dual investment in Indian economy still needs to be |
| profit. Therefore, the producers will have to pay for | | | | incurred exclusively by the government. Therefore, |
| the external economies and the general public will | | | | the partnership of government and private investors |
| have either to go without the generated general | | | | in case of the declared investment worth Rs 500 |
| utility services or will be exploited for they will have | | | | billion, referred to in the beginning hereof, is not |
| to pay high to avail the services. Thus, in a | | | | desirable. The loss to the producers and the poor |
| developing economy where cost of production is | | | | general mass on account of so far brought about |
| high, general mass is poor and markets are | | | | privatization of the past is not a latent fact. All the |
| undeveloped the autonomous investment will lose its | | | | same, if the government somehow feels itself |
| importance if given in private hands. In this way, | | | | helpless to desist from accepting the partnership, it |
| autonomous investment is made of two different | | | | must not at all allow it beyond the dual investment. In |
| portions. One is that which can never be given in | | | | more clear words, the Government of India must |
| private hands irrespective of the fact whether the | | | | keep the (true) autonomous investment fully intact |
| economy is developed or developing. Therefore, this | | | | from the private partnership and may allow the |
| portion of autonomous investment is a true | | | | partnership in the dual investment but only to a |
| autonomous investment. The investment incurred in | | | | limited extent if the partnership can not be fully |
| the projects pertaining to national security, law and | | | | abandoned. |