Explanation:

Capital goods are tools, implements and machines etc. that make production of consumption goods like furniture possible. Since resources are limited in an economy, they can either be channelized for immediate consumption or immediate investment to feed long-term consumption. If they are channelized for immediate consumption (i.e. say we are producing more aerated drinks but not drink making machines), a time would come when demand would overshoot supply and economic stagnation would follow. If however, a balance is maintained by sacrificing some consumption goods to produce more capital goods, we can have more aerated drinks in the future as there will be more machines to fulfil demand.

Statement 1: As production expands it leads to an increase in the income of the workers and thus more demand for goods and services. But this increased demand can be fulfilled only when there are capital goods to produce the additionally required consumption goods. Otherwise this leads to inflation.

Statement 2: If this trend keeps going there will be very few capital goods left in the economy as the left overs will start depreciating. It will become increasingly difficult to produce consumption goods leading to a halt in economic growth. This is why the RBI Governor has prescribed moving from consumption spending to investment  spending for the Indian economy.