NEW DELHI : While a severe resource crunch has forced the government to limit the fiscal stimulus package to less than 1.5% of India’s gross domestic product (GDP), it may now have to cut its capital expenditure to make room for emergency spending to tackle the coronavirus pandemic.
In fact, the discretionary nature of public investments has led successive Indian governments to cut back on capital expenditure to contain fiscal slippages, primarily because it is difficult to prune revenue expenses comprising salaries, pensions and state transfers.
However, considering that public investment in infrastructure projects create jobs and have a multiplier effect on economic activities, the Centre may have to put its priorities right and balance