Government has to re-balance spending to prop up growth: RBI
Government has to re-balance spending to prop up growth: RBI
The Reserve Bank on 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 in Mumbai on Monday evening.

The Reserve Bank on 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 in Mumbai on Monday 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 per cent in Q4 quarter of last fiscal compared to 9.7 per cent 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.

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