Mint Explainer: How FM's capex focus is meant to work
SummaryCapital expenditure refers to investments in upgrading existing or building new physical assets by the government or private businesses. Now, as businesses expand, capex has a multiplier effect on the economy, creating demand and unleashing animal spirits
Finance minister Nirmala Sitharaman has once again emphasised that the government has an ambitious capital expenditure (capex) programme this fiscal to lift demand and boost economic growth. The Modi government’s rededication to the Keynesian plan comes in the backdrop of a rethink on big government spending in the developed world, particularly in the United States, in the wake of inflationary pressures. Will the government crowd-in or crowd-out the private sector, and what does that even mean? Read on.