Economy gathers steam but private investments missing: RBI

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Mumbai (Maharashtra) [India], Mar 1 (ANI): Economic activity is gaining steam in India as Covid-19 incidences recede but private investments are missing in action, according to the Reserve Bank of India (RBI).

“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,” it said in a monthly bulletin.
The ongoing vaccine rollout is releasing pent-up optimism, said the central bank. Broader measures of liquidity reflect the easing of monetary and financial conditions in the system.

Bank credit growth, which witnessed a slowdown in 2019-20, experienced a further setback in 2020-21 in the wake of Covid-19-induced lockdown.

But with the gradual resumption of economic activity, credit to agriculture and services sectors has registered accelerated growth in the recent period, said the RBI.

Even in the industrial sector, credit growth to medium industries has accelerated indicating the positive impact of several measures taken by the government and the RBI.

Empirical estimates indicate that non-food credit is sensitive to interest rate changes with a lag, with industry and services sectors exhibiting greater sensitivity. (ANI)

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