India’s Public Spending Boom Rings Hollow: Myth of the Multiplier
For years, Indian economists droned the same refrain — too much revenue expenditure, not enough capital expenditure. The government, they said, must stop spending on salaries and start building roads. It’s the fiscal equivalent of being told to eat more protein and less dessert. Under Narendra Modi, the state has gone on a construction binge worthy of the Mughal emperors — ₹54 trillion poured into capital expenditure in just eleven years. In the last three alone, we’ve spent over ₹11 trillion annually. Roads, railways, defence, water projects — you name it. The bulldozers haven’t rested since. So, naturally, one would expect an economic dawn — faster movement of goods, lower logistics costs, more jobs, happier people. A Keynesian dream, in other words: the government spends, demand rises, and the private sector jumps in, inspired and eager. Only, it hasn’t. The animal spirit is not just asleep; it seems comatose. Private capital expenditure — the ultimate litmus test of investo...