24 Oct 2018 17:55 IST

What drives investments?

Fiscal deficit appears to have crowded out private investment

Investment activity, which is critical for sustainable growth in the Indian economy, took a hit in 2011-12, pulling down India’s growth rate from a high of 9.3 per cent in 2007-08 to a low of 6.7 per cent in 2017-18. While the investment rate has picked up since 2016-17, sustainability of the turnaround is uncertain. A recent study by the RBI attempts to break down past trends and assess several factors that impact investment activity.