3. For economic growth, capital expenditure is a more prudent and sustainable strategy than demand stimulus, Do you agree? Substantiate your views. (15 Marks)
आर्थिक विकास के लिए, पूंजीगत व्यय मांग प्रोत्साहन की तुलना में अधिक विवेकपूर्ण और टिकाऊ रणनीति है, क्या आप सहमत हैं? अपने विचारों की पुष्टि करें।
Approach-
Candidates need to write about how the capital expenditure is a more prudent and sustainable strategy than demand stimulus for economic growth.
Introduction:
The Union Budget 2022-23 proposed a big boost to capital expenditure and announced several infrastructure projects to pump-prime private investment and economic recovery. Overall, instead of propelling consumption, something that could have pushed demand and raised prices, the government continued its focus on trying to improve the supply side.
Capital Expenditure Is a More Prudent and Sustainable Strategy Than Demand Stimulus
Conclusion:
Having given the push to a big boost to capital expenditure, public infrastructure and higher borrowing, the government now needs to ensure that private investors are able to access money at affordable rates. Easing the inflow of foreign capital and inclusion in global bond indices, financial sector reforms including banking and bond market reforms should follow the budget to ensure that higher private capex follows the FM’s push for public investment.
