Managing investment deficits

23 JAN,2022 | MEDC


 

Well-planned public expenditure has a multiplier effect on the economy and so the government should not hold back on judicious spending in the forthcoming budget. Due to higher than expected revenue collection, the government's financial position is also relatively strong this time. However, the third wave of Covid is now officially upon us, and renewed restrictions on public mobility have affected the ongoing economic recovery. Higher capital expenditure by the government would help jumpstart the growth process and attract private investment as well as FDI over time. This needs to be complemented by the lowering of transaction costs and enhancing the ease of doing business in the economy. In a situation where the government is expected to boost capital expenditure, not spending the budgeted amount would risk growth prospects. That should be avoided.

*Photo Credit: Google

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