New investment proposals from private enterprises are the best measure of the animal spirits of businessmen to aggressively grow their business.

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Most new investment proposals do not lead to creation of new capacities and therefore do not contribute to growth. The likelihood of a proposal turning out to be a dud is higher when the exuberance to invest reaches levels that are arguably irrational. Yet, that madness of private entrepreneurs as seen in their proposals to create new capacities is critically important to ensure growth in a future year. Such madness is a reflection of optimism regarding the future.Such madness was evident during UPA I. Private sector proposed investments worth Rs 11.8 lakh crore per year during this period. This was over eight times the average investments proposed by the private sector in the preceding five years.

This extra-ordinary enthusiasm was tempered during UPA II times, initially following the Lehman crisis of late 2008 and later because of problems inland acquisition, availability of coal, gas and iron ore and also the policy paralysis that plagued the government towards the end of its term.The advent of NDA II was expected to bring back private sector enthusiasm in creation of new capacities. We did witness signs of such a revival in the initial two years of the government. But, it soon fizzled away. By the end of the five years, it is apparent that private sector did not bet on the future during the term of NDA II. Average annual new investment proposals during NDA II were lower than during UPA II and, of course, much lower than during UPA I.

New investment proposals from the private sector averaged at Rs 7.9 lakh crore per annum during this period. This was much lower than the Rs 9.6 lakh crore per annum worth of new investment proposals seen during UPA II and much lower than the Rs 11.8 lakh crore per annum new proposals seen during UPA I.

The NDA II government did not try to counter this drop in private investments by raising public sector investments. Public sector investment proposals grew by less than two percent while private sector proposals dropped by a massive 17 percent. As a result, overall new investment proposals during NDA II fell by 9 percent compared to UPA II.

UPA I and UPA II regimes oversaw a big surge in investment proposals to setup new electricity generation capacities. Between 2005-06 and 2010-11, a period that spans across the two regimes, these investments accounted for over 30 percent of total new investment proposals. During NDA II, this proportion was down to less than 20 percent.The emphasis during the NDA II regime has shifted to transport infrastructure, which is largely roads, railways and air transport. The share of this segment rose to nearly 34 percent.

The rising share of transport infrastructure is over a falling total new investment. Thus, while the share of transport infrastructure in total new investments has more than doubled from 15.4 percent during UPA I to 34 percent in NDA II, the average annual investment proposals into the sector increased by a relatively modest 82 percent from Rs 2.9 lakh crore to Rs 5.3 lakh crore.

Manufacturing industries saw a steady fall in new investment proposals over the three regimes. It is worth noting that the investment boom that began in UPA I originated in manufacturing. Electricity came in next and transport sectors even later. We don't see the same manufacturing sector led boom anywhere on the horizon as of now.

Mahesh Vyas is managing director and CEO of Centre for Monitoring Indian Economy.