What shapes investment?

The ups and downs of private corporate investment are a big part of the story of India's GDP

Ajay Shah 

Ajay Shah A revival in investment is central to Indian business cycle conditions. How and when will this come about? The phrase ‘animal spirits’, which is often used about investment, suggests that there is something mysterious or irrational about the mood of the private sector. Investment can, however, be understood through five questions. Firms build new capacity when they are faring well on capacity utilisation, predicated on profitability and access to capital. Layered on this is the degree of optimism about Indian economic reforms and the expected tailwind of macro growth. Finally, ...

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First Published: Sun, September 03 2017. 22:43 IST