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.