Private investment missing in action: RBI

NEW DELHI: Only private investment is "missing in action" at a time when all engines of aggregate demand are starting to fire to boost economic growth, according to a Reserve Bank article.

Observing that there is little doubt today that a recovery based on a revival of consumption is underway, the RBI in the recent article said, "the jury leans towards such recoveries being shallow and short-lived".

The key to whet the appetite for investment, it said, is to rekindle the animal spirits, a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.

"All engines of aggregate demand are starting to fire; only private investment is missing in action. The time is apposite for private investment to come alive," said the article prepared by RBI Deputy Governor Michael Debabrata Patra and other officials.

The article published in the RBI Bulletin- February 2021 further said "the time is apposite" for private investment to come alive.

Fiscal policy, with the largest capital expenditure (capex) budget ever and emphasis on doing business better, has offered to crowd it in. "Will Indian industry and entrepreneurship pick up the gauntlet?," it said.

The Indian economy is estimated to contract by 8% during the current financial year on account of the impact of the COVID-19 pandemic. The economy is expected to stage a V-shape recovery in the next fiscal and record double-digit growth.

An another article 'Sectoral Deployment of Bank Credit in India: Recent Developments' published in the Bulletin said that the muted credit offtake in the recent past needs to be seen in the context of economic slowdown coupled with the Covid-induced lockdown.