From Wall Street Journal: As more of the world falls into financial turmoil, China is hoping that an infrastructure spending spree can help sustain its long record of expansion and rising prosperity. Much of the $586 billion stimulus package China unveiled this week will go toward building highways, railroads and airports.
For the complete article:
http://online.wsj.com/article/SB122635482375915243.html
Does it make sense for Indian government to follow suite and invest aggressively in infrastructure development? It might be a simplistic way to say government should spend more in the times when markets are down and the expenditure should be of capital nature. The last major Pan India stimulus from the government came in form of the National Corridor – a pet project for then Prime Minister Mr. Atal Bihari Vajpyee. It was one of the major stimuli for steel, cement and heavy vehicles industry in India and one of the factors for getting India out of its Hindu Rate of Growth. Thanks to change in government and with Congress at helm of matters the project met with the same fate as many other things in India – go slow. With the external markets drying up for some time shouldn’t we look at growth from domestic markets? With the nuclear apartheid gone India can seriously look at major investment in nuclear power sector, which alone will propel growth in other industry sectors like road, construction, heavy engineering. But with elections round the corner is the government in mood to take far reaching decisions?
4 comments:
macro fundae reqd :)
consumption, savings, et al...
pls refer to dornbusch-fisher for all your Qs on what measures should an economist take ;-)
Yep.. it is good to spend on infra now.. It creates jobs, keeps money in circulation and brings up the over all economy .. aside from the fact that infra in india is lacking significantly compared to other areas!
Did Subir Roy talk with u, or read the WSJ article before writing this in today's Business Standard?
http://www.business-standard.com/india/storypage.php?autono=339934
K10
Didn't read the article before hand. The thought process was there, found the article to supplement it. Going back to the post and National Corridor Project. If you remember Ashok Leyland was in same state then working 3 days a week, once the project started going on full steam it had to work in overdrive. It was one of the major stimulus which propelled India's Hindu Growth Rate to a globally acceptable one.
As for Macro, barely managed to scrape through it in B School, but I find this to be a common sense approach. Great cricket captains have always said that leadership is about keeping things simple. May be economic leadership also needs to follow similar direction
And then I am not Fin Min so i can always make comments like this :-)
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