In the context of pandemic, the capital expenditure can boost long-term growth within the Indian economy. Discuss (200 Words)
Refer - Financial Express
Enrich the answer from other sources, if the question demands.
IAS Parliament 4 years
KEY POINTS
· A lack of capital expenditure has often been criticised as neglecting long-term targets of economic growth and employment.
· While creating direct consumer demand is an important lever for immediate boost to the economy, it may not sustain a high growth trajectory in the longer term.
· Capital expenditure is expected to achieve this through a multiplier effect (a change in rupee value of output with respect to a change in rupee value of expenditure).
· In India, the multiplier effect of capital expenditure made by the central government is estimated at 2.45, whereas for state governments it is around 2 (according to the RBI Bulletin, December 2020).
· The Asian Development Bank also noted that the project implementation costs in India’s transport industry were substantially higher than in Sri Lanka and China.
· The maintenance, repair and operation (MRO) expenditure, which is part of revenue expenditure, will have to be monitored during project implementation.
· The government should also aim to cut down on inefficient revenue expenditure.
