How the govt used bank funds as a substitute for public investment
Total government spending as a proportion of GDP has been going down
The government’s mid-year analysis report makes the point that public investment is a must, simply because the private corporate sector is over-indebted and unable to undertake additional projects. Banks too, with their huge bad and restructured loans, are in no position to lend to infrastructure. The government’s position that the fiscal consolidation road map may have to be given up to enable government investment is controversial, but they are right when they say the government has failed to expand investment.
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