Staff analysis suggests that standard macrofinancial variables (interest rates, external demand, relative prices,
global financial market volatility) do not appear to fully explain the recent slump in domestic investment
in India. These variables are able to explain only about half of the total investment slowdown witnessed
during 2010/11–2012/13, while systematically over-predicting investment in the past two years. This
suggests that other factors, such as supply bottlenecks and potentially policy uncertainty, are at play