Investment slowdown?

Investment slowdown?
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First Published: Thu, Mar 13 2008. 01 07 AM IST
Updated: Thu, Mar 13 2008. 01 07 AM IST
Exhibit 1: The new industrial production numbers for January released on Wednesday had a shocker. Production of capital goods grew at an annual rate of 2.1%. That’s anaemic compared with 16.6% in the previous month, and the slowest in nearly six years.
Exhibit 2: The national income estimates released in February show that fixed capital formation as a proportion of gross domestic product has slipped from 33% in the first two quarters of 2007-08 to 31.6% in the third quarter.
Time for an uncomfortable question: Is India’s four-year investment boom running into a spot of trouble? The two bits of data mentioned above suggest some signs of strain. Consumer spending is already slowing. And now there are signs that investment spending too is running against some speed breakers.
That could be a double whammy for the Indian economy. But it’s too early to jump to any conclusion.
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First Published: Thu, Mar 13 2008. 01 07 AM IST
More Topics: IIP | Slowdown | Income | GDP | Consumer spending |