Investments in India grew after a gap of three quarters, driven by the government, while demand contracted for the third consecutive quarter during October-December (Q3) of the financial year 2020-21 (FY21).
Even then, investments remained subdued, growing by a marginal 2.56 percent in Q3FY21. It had started declining even before the pandemic started impacting India’s economy.
Gross fixed capital formation (GFCF) contracted by 6.48 percent in Q4FY20. It plunged in Q1FY21 before returning to earlier levels in Q2.
according to experts investments in Q3 were driven purely by the government. This is backed up by the data from the Centre for Monitoring Indian Economy (CMIE), which showed that investments in new projects declined to Rs 0.91 trillion in Q3, compared with Rs 1.15 in Q2.
Investment activity reverted to growth, supported by high levels of public investment spending, said Rahul Bajoria, chief economist at Barclays India.
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