Balancing Economic Growth and Investment UPSC
Since the COVID-19 pandemic, the Indian government has heavily relied on public spending in infrastructure to boost the economy. The idea is that building roads, bridges, and other infrastructure creates demand for materials like cement and steel, generates jobs, and triggers a strong ripple effect that helps the economy grow. This approach is also meant to encourage private companies to invest in new projects. In the 2024-25 Budget, Finance Minister Nirmala Sitharaman emphasized the importance of continuing this strategy. She announced a capital expenditure (capex) of ₹11.11 lakh crore for the year, which is 3.4% of India’s GDP. However, due to restrictions on spending during the election period in the first quarter, it is unlikely that this target will be met. Even as industries call for the government to maintain its focus on capex in 2025-26, private companies have not matched the government’s efforts by increasing their own investments.
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