Current Affairs · Union Budget
The Union Budget allocates a historically high percentage of its total expenditure towards Capital Expenditure (Capex). From a macroeconomic perspective, the primary justification for this strategy is that increased Capex is expected to:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Directly and immediately reduce the Revenue Deficit and the debt-to-GDP ratio within the same financial year.
- 2Reduce the need for future government intervention in the economy by discouraging private sector investment.
- 3Trigger a higher, more sustained positive multiplier effect on GDP growth compared to Revenue Expenditure, and boost the economy's long-term productive capacity.✓
- 4Shift the economy instantly from the Peak phase into the Trough phase by rapidly reducing inflationary pressure.
Correct answer
Trigger a higher, more sustained positive multiplier effect on GDP growth compared to Revenue Expenditure, and boost the economy's long-term productive capacity.
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