The investment puzzle

Sustainable demand revival will need policy certainty

Demand destruction caused by the pandemic and associated restrictions seemed to have moderated over the past year, with the resumption of mobility and trade. This had led to hopes that private investment in the economy would revive, putting a growth recovery on firmer footing. The Indian economy in recent times — indeed, for years even prior to the pandemic — had suffered from the unwillingness of private capital to increase investment. As a proportion of gross domestic product (GDP), gross fixed capital formation has never reached the sustained high levels observed in the high-growth years of the 2000s. But there