Swaminathan Aiyar argues that Infrastructure spending in today's world doesn't exhibit the Keynesian effect (Read the article here: http://economictimes.indiatimes.com/articleshow/3730597.cms). He argues since today's economies aren't leak proof, the spending on huge infrastructure projects doesn't trickle down to common man. Hence the required boost for consumption increase goes missing. As an analogy to Keynes idea of digging the ditches and re-filling them; wouldn't the general elections in India provide the similar impetus to boost the spending and thus consumption?
1. Elections involve mobilisation of large number of people
2. Huge amount of cash flows around (Elections Commission may not like this part!)
3. Banner printing, transportation and other logistics supporting the elections gets a boost
4. Black money in the system gets rejigged
It may not be a bad idea afterall to have an early elections!
Thursday, November 20, 2008
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