Two engines of the economy need to fire4 min read . Updated: 23 Jul 2018, 11:59 PM IST
Both investment and its productivity should pick up as the deleveraging phase gets over, crowding-in benefits of public investment kick in and efficiency-enhancing reforms start bearing fruit
The recovery in investments will continue in fiscal 2019, led by government efforts to build roads and houses. Capacity utilization, which is a pre-condition to revival in private sector investments, should also keep improving. Additionally, the crowding-in impact of public investments is expected to kick in later. Yet a broad-based and decisive pick-up in the investment cycle will take time. The share of gross fixed capital formation—fresh investments in the form of plant and machinery, dwellings and other buildings—in India’s gross domestic product (GDP), which is also called the investment rate, averaged 31% in fiscals 2015-2018, compared with 33.6% in fiscals 2010-2014. It touched a decadal low of 30.3% in fiscal 2016.