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Friday, 19 October 2018

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Boom in investment cycle to continue till 2022-23

Boom in investment cycle to continue till 2022-23




According to the Reserve Bank, economists have no need to worry about slowdown in the economy. According to the study of the RBI staff, the current boom in the investment cycle can continue till 2022-23. But in the face of an increase in the inflation-adjusted real lending rate, there might be pressure on the investment.

Growth in real GDP growth in the June quarter of current fiscal, boom in bank credit growth and robustness in the stock market indicate the durability of investment activity. But the uncertainty created on the global front and financial markets can spoil the issue.

Trending in the investment cycle starting from 2016-17 can be up until 2022-23. This estimate was given in the Research Paper of the Senior Officer, Janak Raj, Satyanand Sahoo and Shiv Shankar in RBI Monetary Policy Department. Investment rate can increase from existing 31.4% to 33.0%.

In the research paper, the investment pattern has been analyzed to find out how fast it can be due to cyclical or non-cyclical or trend factors. According to this, since the year 2011-12, investment trends have contributed more towards the cyclical factor than the trend factor.

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