Explained: In economic slowdown, a back story about falling investor confidence | Explained News, The Indian Express

Explained: In economic slowdown, a back story about falling investor confidence | Explained News, The Indian Express

Written by Harish Damodaran |New Delhi |Updated: August 26, 2019 8:45:40 am

Explained: In economic slowdown, a back story about falling investor confidence

Fixing the economy today cannot happen through consumption; revival in investment is what's desperately needed.

India’s current economic slowdown is showing because of consumption spending clearly falling, be it on cars or Rs 5 biscuit packs. (C R Sasikumar)

Investment, unlike consumption, satisfies no immediate want. The businessman putting his money today is basically taking a bet on the future, when it would start yielding returns. Such bets are a function of the “state of confidence” at the time of investment. The investor has to be reasonably, if not absolutely, certain about the prospective yields — again based on today’s knowledge of tomorrow.