MUMBAI: Private sector expenditure And consumptionNot only India but most of the world pose the biggest hurdles to fueling the global growth engine, economists said during a discussion on the IMF’s ‘regional economic outlook’ for Asia. The main reasons for slowing these two growth drivers are global uncertainty levels and interest rates, both of which are at multi-year highs, she added.
Most countries are focused on short-term policies, said Krishna Srinivasan, IMF Asia-Pacific department director. “That is right. But short-term thinking must give way to longer-term reforms that will boost the economies of this region,” he said.
Bank of Baroda chief economist Madan Sabnavis said private investment in the country has not recovered even from pre-pandemic levels. A large part of the total investment that takes place comes from the central government, which has certain plans such as roads and railways. The problem lies with consumer-oriented industries. “We’re not creating the kind of jobs we appear to be creating,” he said. The turnaround will be a slow process, he said.
Private sector investment data for the first two quarters show a moderate trend, despite the positive boost from large aircraft orders from some private airlines. “Otherwise, we see limited investment in the infrastructure sector and nothing substantial in the consumer sector.” The country needs to create jobs and consumer power, which will strengthen itself when it comes to investments, he said. Rupa Rege-Nisture, chief economist at L&T Finance Holdings group, said there is inequality in the recovery of consumption in India, where premium products are selling well but products reflecting rural demand are seeing flat or negative growth to see. If you see the GST receipts and their breakup, a lot of it comes from high-end consumer items, she said. “At the mass level, we have not seen any increase in purchasing power,” she said.
Most countries are focused on short-term policies, said Krishna Srinivasan, IMF Asia-Pacific department director. “That is right. But short-term thinking must give way to longer-term reforms that will boost the economies of this region,” he said.
Bank of Baroda chief economist Madan Sabnavis said private investment in the country has not recovered even from pre-pandemic levels. A large part of the total investment that takes place comes from the central government, which has certain plans such as roads and railways. The problem lies with consumer-oriented industries. “We’re not creating the kind of jobs we appear to be creating,” he said. The turnaround will be a slow process, he said.
Private sector investment data for the first two quarters show a moderate trend, despite the positive boost from large aircraft orders from some private airlines. “Otherwise, we see limited investment in the infrastructure sector and nothing substantial in the consumer sector.” The country needs to create jobs and consumer power, which will strengthen itself when it comes to investments, he said. Rupa Rege-Nisture, chief economist at L&T Finance Holdings group, said there is inequality in the recovery of consumption in India, where premium products are selling well but products reflecting rural demand are seeing flat or negative growth to see. If you see the GST receipts and their breakup, a lot of it comes from high-end consumer items, she said. “At the mass level, we have not seen any increase in purchasing power,” she said.
