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An emphasis on capital expenditure will lead to investment in long-term assets such as infrastructure and development projects. This can have several positive impacts on the Indian economy. Elaborate.

Topic: Government Budgeting.

4.  An emphasis on capital expenditure will lead to investment in long-term assets such as infrastructure and development projects. This can have several positive impacts on the Indian economy. Elaborate. (250 words)

Difficulty level: Moderate

Reference: Insights on India

Why the question:

The question is part of the static syllabus of General studies paper – 3 and mentioned as part of Mission-2024 Secure timetable.

Key Demand of the question:

To write about the impact of increased capital expenditure on the economy of India.

Analyse – When asked to analyse, you must examine methodically the structure or nature of the topic by separating it into component parts and present them in a summary.

Structure of the answer:

Introduction: 

Begin by defining a capital expenditure as part of the budget.

Body:

First, write about the various measures proposed in the Budget 2022 to boost capital expenditure in India.

Next, write about the positive impact the increased capital expenditure will have on the economy of India – speedy and sustainable revival, crowding in private investment, boost to investment activity and support economic growth in the next year etc.

Next, write the downside of increased capital expenditure – higher inflation, higher fiscal deficit etc.

Conclusion:

Conclude by writing a way forward to have a prudent increase in capital expenditure whilst adhering to fiscal limits of borrowing.