The country’s central bank i.e. Reserve Bank of India (RBI) on Thursday said that the government’s emphasis on infrastructure along with increased business confidence can lead to revival in the investment cycle on a sustained basis. According to the RBI Monetary Policy Report – April 2024, domestic economic activity remained strong in the first half of 2023-24 with strong fundamentals amid the challenges of weak global demand. The report said that while real GDP (gross domestic product) growth was driven by investment in capital goods and lower net global demand, private consumption was supported by urban demand. Regarding the supply side, it has been said that manufacturing activities became stronger.
Construction activity remained strong
The sector benefited from lower raw material costs and improved global supply arrangements. Also, construction activity remained strong due to rising housing demand and the government’s focus on infrastructure. According to the report, in the times to come, private consumption will be supported by better rural demand prospects and rising consumer confidence. The government’s continued emphasis on infrastructure creation, increase in private corporate investment and enthusiasm at business levels could sustain the revival in the investment cycle, the RBI report said.
Capital expenditure estimated to be Rs 11.11 lakh crore
This is a good sign to boost productivity and growth in the economy. It said, the growth potential of the economy is increasing in the medium and long term. This is due to structural factors such as improvement in physical infrastructure, development of world-class digital and payments technology, ease of doing business, increasing workforce participation and improvement in the quality of fiscal spending. The government has estimated capital expenditure to increase by 11 percent to Rs 11.11 lakh crore in the current financial year with increased private investment in 2024-25.
Whereas in the financial year 2023-24, capital expenditure was increased by 37.5 percent to Rs 10 lakh crore. According to the RBI survey, confidence among consumers reached a new high just a year ago. The survey said that prospects for investment activities remain good. This is due to increased private capital expenditure, consistent and strong government capital expenditure, strong balance sheets of banks and companies, increased capacity utilization and strong optimism at the business level.
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