Waning input cost, rising investments herald upturn in capex cycle: RBI


Waning input cost pressures, buoyant corporate sales and rising investments in fixed assets are heralding the beginning of an upturn in the capex cycle in India will contribute to speed up growth momentum in the economy, said an article on Tuesday.

The balance of risks is increasingly tilted towards a darkening global outlook and emerging market economies (EMEs) appear to be more vulnerable, even though incoming data suggest that global inflation may have peaked, said the article titled ‘State of the Economy’ published in the Bulletin December 2022 article.

“The near-term growth outlook for the Indian economy is supported by domestic drivers as reflected in trends in high-frequency indicators,” it said and added equity markets touched a string of new highs during November buoyed by strong portfolio flows to India.

Headline inflation moderated by 90 basis points to 5.9 per cent in November driven by a fall in vegetable prices even as core inflation remained steady at 6 per cent.

“Waning input cost pressures, still buoyant corporate sales and turn-up in investments in fixed assets are heralding the beginning of an upturn in the capex cycle in India which will contribute to a speeding up of growth momentum in the Indian economy,” it said.

The article has been authored by a team led by Deputy Governor Michael Debabrata Patra. The RBI, however, said that views expressed in the article are those of the authors and do not represent the views of the central bank.

The article further said that in December, as India engages in setting out its priorities and deliverables under its G20 Presidency, there is a sense that “perhaps her time in the centre of the world’s stage has arrived”.

As the third largest economy in PPP terms, and the fifth largest in terms of market exchange rates, India accounts for 3.6 per cent of G20 GDP while its share in real (PPP) terms is much higher at 8.2 per cent.

In 2023, India is projected to be among the fastest-growing economies within G20.

“Our priorities under the G20 Presidency encapsulate a vision of unity and interconnectedness,” said the article and added they will also reflect the priorities of the global South: One Earth, One Family, One Future.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)


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