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The Reserve Bank of India (RBI) in its monthly bulletin for February 2021 said that India’s economic activity is gaining momentum as Covid-19 incidence recedes but private investment still remains a concern.
“All engines of aggregate demand are starting to fire, only private investment is missing in action and the time is apposite for it to come alive. Broader measures of liquidity reflect an easing of monetary and financial conditions in the system,” the bulletin said.
RBI Governor Shaktikanta Das had on Wednesday had said that the Centre needs to ramp up spending on the infrastructure sector which will in turn help in pooling in private investments for the sector. In an exclusive interview with CNBC-TV18, Das had said, “Government has to increase spending on infrastructure. It is expected that infra spending will crowd in private investment.”
Union Budget 2021 announcements for physical infrastructure spending are targeted significantly higher in FY22 compared with previous years. The central government capex is projected to touch Rs 5.54 trillion next fiscal, while FY21 will close at Rs 4.4 trillion. The Centre, recognising the need for states to catch up next year and to compensate for lower tax devolutions this fiscal, will offer an additional Rs 2 trillion to them for their capital spending.
India’s GDP in the third quarter of FY21 rose marginally at 0.4 percent, in line with expectations, reaffirming that the economy had managed to exit the Coronavirus pandemic-led slump by 2020-end, according to official data released by the National Statistical Office (NSO) on Friday.
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