New Delhi. The Reserve Bank of India (RBI) on Thursday said increased business confidence along with the government’s focus on infrastructure could lead to a sustained revival in the investment cycle. According to the RBI’s April 2024 monetary policy report, domestic economic activity remained robust with a strong base in the first half of 2023-24, amid challenges of weak global demand.
While investment in capital goods and real GDP growth were driven by the subdued impact of global demand, private consumption was supported by urban demand, the report said. It noted that manufacturing activity strengthened, benefiting from lower raw material costs and improvements in global supply chains. Additionally, the construction sector remained strong due to increased housing demand and the government’s emphasis on infrastructure.
The report forecasts better prospects for private consumption in the future due to improvement in rural demand and increased consumer confidence. It highlighted that the government’s continued emphasis on infrastructure, increased private corporate investment and enthusiasm at the business level could sustain the revival in the investment cycle. It is estimated that the capital expenditure will be at Rs. 11.11 trillion, which shows a positive sign for productivity and growth in the economy.
The report attributes this to structural factors such as improvements in physical infrastructure, development of global digital and payments technologies, ease of doing business, increase in labor force participation and improvement in the quality of fiscal spending. The government increased capital expenditure by 11 percent to Rs. Estimated to do. Compared to Rs 11.11 trillion in the current financial year 2024-25. In the last financial year 2023-24, where it increased by 37.5 percent to Rs 10 trillion.
According to the RBI survey, consumer confidence had reached a new high just a year ago. The survey indicated improved prospects for investment activity, attributed to increased private capital expenditure, consistent and robust government capital expenditure, strong bank and corporate balance sheets, rising capacity utilization and strong optimism at business levels.