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Govt has to re-balance spending to prop up growth: RBI

Last Updated: Monday, July 29, 2013 - 22:30

Mumbai: The Reserve Bank Monday said the government has to re-balance its spending from non-productive to investment-centric, to pull the economy out of morass.

"The key to turning around the economy will be re-balancing government spending from current to capital expenditures with a view to `crowding-in' private investment," the RBI said in its first quarter macroeconomic and monetary development report released here this evening.

Aggregate demand, as reflected on the expenditure side of GDP, remained sluggish during Q4 of FY13, the RBI said.

Apart from investment, private consumption too decelerated adding to the drag on demand during the past fiscal.

The private consumption expenditure fell to 3.8 percent in Q4 quarter of last fiscal compared to 9.7 percent in the year-ago period.

Private final consumption expenditure, which is the principal component of GDP at market prices, continued to decelerate during the fourth quarter due to weak agricultural production and persistent high consumer price inflation, the review said.

It further said that in FY13, corporate investment intentions also remained languid, reflecting the overall negative business sentiment arising from slack cyclical conditions and structural factors.

PTI

First Published: Monday, July 29, 2013 - 22:30
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