regular-article-logo Friday, 09 June 2023

Centre to raise expenditure on health, housing and infrastructure

Economists have argued for increased government spending to revive the demand cycle

Our Special Correspondent New Delhi Published 18.01.21, 02:49 AM
Nirmala Sitharaman.

Nirmala Sitharaman. File picture

The Centre is expected to raise the expenditure on health, housing and infrastructure which reinvigorate demand in many more sectors and breathe life into the economy which is expected to contract 7.7 per cent this fiscal against 4.2 per cent growth a year ago.

The contraction in the economy would be the sharpest since Independence.


Economists have argued for increased government spending to revive the demand cycle. They expect the government to spend more in sectors such as healthcare, housing and construction-heavy infrastructure, which positively impact many industries.

Indications are that it will be more an “expenditure budget” than a “revenue budget” as public spending has a huge trickle-down effect and benefits many industries from cement to steel besides creating durable jobs.

The government had estimated spending in the current fiscal at Rs 30.42 lakh crore and 55 per cent of the sum has been exhausted by October against over 59 per cent spent in the corresponding period of the previous year.

Step up spending

In the pre-budget consultations, economists, industry chambers and others have suggested to the senior finance ministry officials that the government should lead the way by enhancing infrastructure spend by 1 per cent of GDP; increase allocation for Pradhan Mantri Awas Yojana and Pradhan Mantri Gram Sadak Yojana; and increase public health expenditure to 3 per cent of GDP by 2025.

North Block officials said the suggestions are being considered and measures and directions towards this end would be visible in the budget.

Industry chamber CII said because of the challenges faced by the economy, there is no option but for the Centre to aggressively intervene immediately and invest heavily to lift growth.

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