India Needs 34-35% Investment Rate for 8% Growth, Says Former EAC-PM Member Surjit Bhalla

India Needs 34-35% Investment Rate for 8% Growth, Says Former EAC-PM Member Surjit Bhalla

India needs to raise its investment rate to around 34-35 per cent of GDP to accelerate growth, with higher private investment essential for long-term productivity and sustainable economic expansion, said Surjit Bhalla, former member of the Economic Advisory Council to the Prime Minister (EAC-PM).

Speaking to ANI on the sidelines of the 'Elara India Dialogue 2026: Aswamedh-India Renaissance' in Mumbai on Monday, Bhalla said India's current investment-to-GDP ratio of around 28-30 per cent supports a long-term growth rate of about 5 per cent. Raising the rate to 34-35 per cent would be essential to achieve 8 per cent growth, he added.

Bhalla noted that private investment has historically delivered higher productivity gains than government investment. He pointed out that public investment is largely directed towards infrastructure, which can provide an immediate economic boost but tends to generate lower returns over time.

"You need government investment, but for productivity gains, as well as long-term growth sustainability, you need private investment," Bhalla said, highlighting that India's private investment has declined by five to seven percentage points since 2011-12, which he called a "big gap."

With global trade conditions unlikely to provide significant support, stronger domestic investment will be key to meeting India's 8 per cent growth target, Bhalla emphasised.

Bhalla also criticised the 2015 Bilateral Investment Treaty (BIT), calling it the "most anti-investment treaty" and a significant barrier to foreign investment. "BITS Treaty that we have, the 2015, is the most anti-investment treaty anybody in the world has ever a major reason why our investment rate has fallen," he said.

He stressed the importance of regulatory reforms and improving the ease of doing business to revive investment. Bhalla said the Department of Commerce, while not a regulator in the strict sense, is among the most important government bodies influencing investment, alongside regulators such as SEBI.

"The major regulator is the government itself through its policies," Bhalla said.