Advocacy & Government: Analysts at securities and stock market firms are using the current economic slowdown to ask the government to prioritise capital expenditure over social spending.
Analysts at research house Bernstein (India) Pvt. Ltd said, “The government needs to peg a higher growth target for capex—around 30 percent year-on-year for a meaningful impact. Subsidies must be controlled, as they are now similar to capex in terms of GDP intensity.”
Spending more on infrastructure and allied projects would create more jobs and boost the purchasing power in the economy, and have a higher multiplier effect on economic recovery.
However, economic recovery globally, including India, is turning out to be K-shaped—a sign of rising inequality. And some experts believe that the government should focus on tackling this inequality, even if it means compromising on the fiscal front. According to Vetri Subramaniam, Head of Equity at UTI Asset Management Company, direct benefit transfers could be a swifter and effective method to boost spending power.