States must step up capex, says RBI guv
Business Standard|October 16, 2021
Quality spending can have multiplier effect: Das
ANUP ROY

GOVERNOR-SPEAK

• Expenditure on healthcare and education needs to be significantly ramped up

• Automation taking jobs of low-skilled workers; reskilling needed for them

• Developed states with better debt to GSDP ratio must step up expenditure

• Quality of expenditure should be good; there should be multiplier effect

• Schemes must have a sunset date, must be closed after the need is over

Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday said fiscally prudent states must step up their quality expenditure in a way that it would have a multiplier effect on the economy and would prompt other states to increase their own capital expenditures.

Das stressed that the quality of expenditure by states was important as they incurred 60 per cent of the general government expenditure (the Centre plus state combined), whereas the global average of sub-national spending was just about 30 per cent.

"The state finances and the expenditures by states do play an important role in the growth of the country's GDP (gross domestic product), and more particularly in current times when India is recovering from one of the worst challenges to its economies," Das said while speaking at an event organised by the London School of Economics (LSE).

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