ISSN 2394-5125
 

Research Article 


THE GENERAL GOVERNMENT CAPITAL SPENDING AND ITS EFFECT ON GDP: EVIDENCE FROM INDIA

Dr Tamma Koti Reddy.

Abstract
The study attempts to examine the effect t of General government capital spending on Real GDP growth for the period 1990-91 to 2018-19 using Multiple Regression model. GDP at Factor cost is the dependent variable while General government capital expenditure, Gross fixed capital formation, Inflation and Combined tax revenue are the independent variables. The result indicates that the General government’s capital spending has a positive and insignificant impact on economic growth of India for the period under study. The author points out that a limited size of low quality capital expenditure than that of huge current expenditure has failed to show a significant impact on economic growth. The other independent variables also have shown a positive and insignificant impact on economic growth due to low Tax-GDP Ratio, higher Incremental Capital-Output ratio and lack proper inflationary targeting mechanism. The study highlights that government should allocate more resources for productive sectors of the economy like Infrastructure, agriculture and industry to accelerate the economic growth. There is a need to achieve fiscal consolidation by reducing the revenue expenditure, effective implementation of FRBM Act, fiscal deficit, rationalizing the subsidies and enhancing the Tax-GDP ratio etc. To avoid economic slowdown in the context of USA-China trade war and COVID-19 pandemic, reforms relating to composition and management of public expenditure is essential.

Key words: Capital expenditure, Economic Growth, Tax revenue, Inflation, Gross Fixed Capital formation, Multiple regression model.


 
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Pubmed Style

Dr Tamma Koti Reddy. THE GENERAL GOVERNMENT CAPITAL SPENDING AND ITS EFFECT ON GDP: EVIDENCE FROM INDIA. JCR. 2020; 7(19): 4164-4174. doi:10.31838/jcr.07.19.488


Web Style

Dr Tamma Koti Reddy. THE GENERAL GOVERNMENT CAPITAL SPENDING AND ITS EFFECT ON GDP: EVIDENCE FROM INDIA. http://www.jcreview.com/?mno=127616 [Access: September 14, 2020]. doi:10.31838/jcr.07.19.488


AMA (American Medical Association) Style

Dr Tamma Koti Reddy. THE GENERAL GOVERNMENT CAPITAL SPENDING AND ITS EFFECT ON GDP: EVIDENCE FROM INDIA. JCR. 2020; 7(19): 4164-4174. doi:10.31838/jcr.07.19.488



Vancouver/ICMJE Style

Dr Tamma Koti Reddy. THE GENERAL GOVERNMENT CAPITAL SPENDING AND ITS EFFECT ON GDP: EVIDENCE FROM INDIA. JCR. (2020), [cited September 14, 2020]; 7(19): 4164-4174. doi:10.31838/jcr.07.19.488



Harvard Style

Dr Tamma Koti Reddy (2020) THE GENERAL GOVERNMENT CAPITAL SPENDING AND ITS EFFECT ON GDP: EVIDENCE FROM INDIA. JCR, 7 (19), 4164-4174. doi:10.31838/jcr.07.19.488



Turabian Style

Dr Tamma Koti Reddy. 2020. THE GENERAL GOVERNMENT CAPITAL SPENDING AND ITS EFFECT ON GDP: EVIDENCE FROM INDIA. Journal of Critical Reviews, 7 (19), 4164-4174. doi:10.31838/jcr.07.19.488



Chicago Style

Dr Tamma Koti Reddy. "THE GENERAL GOVERNMENT CAPITAL SPENDING AND ITS EFFECT ON GDP: EVIDENCE FROM INDIA." Journal of Critical Reviews 7 (2020), 4164-4174. doi:10.31838/jcr.07.19.488



MLA (The Modern Language Association) Style

Dr Tamma Koti Reddy. "THE GENERAL GOVERNMENT CAPITAL SPENDING AND ITS EFFECT ON GDP: EVIDENCE FROM INDIA." Journal of Critical Reviews 7.19 (2020), 4164-4174. Print. doi:10.31838/jcr.07.19.488



APA (American Psychological Association) Style

Dr Tamma Koti Reddy (2020) THE GENERAL GOVERNMENT CAPITAL SPENDING AND ITS EFFECT ON GDP: EVIDENCE FROM INDIA. Journal of Critical Reviews, 7 (19), 4164-4174. doi:10.31838/jcr.07.19.488