Economic Survey 2017: Volume I, Chapter 3: Investment and Saving Slowdowns and Recoveries: Cross-Country Insights for India

Published By: Ministry of Finance, Govt of India | Published Date: January , 2018

This chapter draws on cross-country experience to study the pattern of investment and saving slowdowns as well as recoveries in order to obtain policy lessons for India. One finding is that investment slowdowns have an impact on growth but not necessarily saving. Another is that recoveries from investment slowdowns, especially those associated with balance sheet difficulties--as in India--tend to be slow. Notably, mean reversion or some degree of automatic bounce-back is absent so that the deeper the slowdown, the slower and shallower the recovery. The policy conclusion is urgent prioritization of investment revival to arrest more lasting growth impacts, as the government has done with plans for resolution of bad debts and recapitalization of public sector banks.

Author(s): Arun Jaitley | Posted on: Jan 31, 2018 | Views() | Download (311)


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