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Reduced growth in private equity owing to a mild increase in capital goods prices: Arvind Virmani, a member of the EAC-PM

<p>Member of the Economic Advisory Council of Prime Ministers (EAC-PM) Arvind Virmani has said that one must see the figures based on constant prices in order to really understand the private investment landscape, a point of contention in the ongoing discussion over whether or not it is increasing.</p>
<p><img decoding=”async” class=”alignnone wp-image-507850″ src=”https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-reduced-growth-in-private-equity-owing-to-a-mild-increase-in-capital-goods-prices–750×603.jpg” alt=”theindiaprint.com reduced growth in private equity owing to a mild increase in capital goods prices” width=”993″ height=”799″ title=”Reduced growth in private equity owing to a mild increase in capital goods prices: Arvind Virmani, a member of the EAC-PM 6″ srcset=”https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-reduced-growth-in-private-equity-owing-to-a-mild-increase-in-capital-goods-prices–750×603.jpg 750w, https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-reduced-growth-in-private-equity-owing-to-a-mild-increase-in-capital-goods-prices–1024×823.jpg 1024w, https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-reduced-growth-in-private-equity-owing-to-a-mild-increase-in-capital-goods-prices–768×617.jpg 768w, https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-reduced-growth-in-private-equity-owing-to-a-mild-increase-in-capital-goods-prices-.jpg 1200w” sizes=”(max-width: 993px) 100vw, 993px” /></p>
<p>In a conversation with this publication, he said that the modest increase in the cost of plant and equipment seems to be the main reason why private investment appears to be slowing down in nominal terms or current prices.</p>
<p>“Investment goods and capital prices are increasing more slowly than the GDP.” According to Virmani, when the GDP-to-investment ratio (which includes machinery and equipment investment) is dropping at a slower rate than it was at constant prices, it indicates that people are spending the same amount but purchasing more goods.</p>
<p>According to him, the actual prices decreased since there was less inflation in capital goods than there was elsewhere. The same amount of money might be used to purchase additional capital items. It seemed to be declining financially, but it wasn’t in actual terms, according to Virmani.</p>
<p>He continued by saying that there had been a little decline in real private investment as a result of a large decline in household savings and real estate and tangible goods investments. “One factor accounted for nearly 95% of the decline in the real investment to GDP ratio: households were making fewer investments in housing structure,” Virmani said.</p>
<p>He did, however, go on to say that this latency is now improving. He contends that knowledge of the past is crucial to understanding the present. “You cannot comprehend the present until you comprehend the past. It had nothing to do with a decline in private investment. According to him, there was a little actual reduction, which was brought on by a drop in family housing investment.</p>
<p>He was upset that while the housing investment had previously declined, it was now increasing.</p>

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