MUMBAI: The Reserve Bank of India (RBI) has predicted the beginning of an upturn in the Capex cycle in India as input cost pressures subside, corporate sales remain buoyant and investments in fixed assets continue to turn up.
In its monthly bulletin released on Tuesday, the RBI said the Capex cycle upturn would contribute to a speeding up of growth momentum in the Indian economy. “Waning input cost pressures, still buoyant corporate sales and turn-up in investments in fixed assets are heralding the beginning of an upturn in the Capex cycle in India which will contribute to a speeding up of growth momentum in the Indian economy,” noted the bulletin.
“The near-term growth outlook for the economy is supported by domestic drivers as reflected in trends in high-frequency indicators. Equity markets touched a string of new highs during November, buoyed by strong portfolio inflows. Headline inflation moderated by 90 basis points to 5.9%in November, driven by a fall in vegetable prices even as core inflation remained steady at 6%,” it added.
Giving a positive outlook on the economy, the central bank said that capital flows to India are strengthening. Business and consumer confidence is turning up, and expectations of a better second half of 2022-23 relative to the first half are being reflected in forward-looking surveys.
“India’s resilience in the face of the deteriorating external environment has been acknowledged elsewhere too. The near-term outlook for the economy has been upgraded, supported by domestic drivers.”