Investment activity hits historic low in FY21 due to pandemic
Published On: Tuesday, June 1, 2021 | By: Team KnowMyStock
In the fourth quarter of the financial year, 2020-21 (Q4FY21) investment activity revived to a seven-quarter high and demand recovered to a five-quarter high but this may not sustain because of the impact of the second wave of Covid-19 on rural demand and corporate spending, feel economists. The better-than-expected economic growth in Q4 was largely led by a spike in government spending and double-digit growth in investment activity, owing to a low base. However, for the whole of FY21, growth in investment and consumption touched a historic low as the country grappled with the impact of the nationwide lockdown in Q1.
According to experts although FY22 will see strong growth, mainly because of the lower base of FY21 (worst economic growth performance of the post-independence era), the consumption and investment outlook remains bleak.
“Due to base affect both consumption and investment growth will remain positive in the first half of FY22. However, it will be too early to term this a revival on account of a host of factors. The monthly core infrastructure data is still patchy and uneven. Due to localised and regional lockdowns, non-essential sales are not taking place and inventories are being piled up with manufacturers/stockists" many economists opined.
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