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The Reserve Bank of India (RBI) in its article has said that improving infrastructure, ensuring low and stable inflation, and maintaining macroeconomic stability is critical for reviving animal spirits and spurring growth. It noted that the Indian economy consolidated its recovery, with most constituents surpassing pre-pandemic levels of activity.

It said heightened global risks stemming from weakening growth, elevated inflation, supply disruptions on account of geopolitical spillovers and financial market volatility stemming from synchronized monetary tightening pose near-term challenges. It also said India faces challenges in building from the scars of the pandemic through larger investments in health and productivity of the human capital.

Further, it said that with an acceleration in the pace of digitalization, the footprint of the unicorn ecosystem in India is expanding, reflecting a rapidly changing economy. In order to achieve a higher growth path on a sustainable basis, it said private investment needs to be encouraged through higher capital expenditure by the government which crowds in private investment.