Er…….Making New Roads, Religious Places, Infrastructure, Metro Projects are all economically stimulating projects and they boost the economy - not dampen it.
Lets say you Build a Temple
YOu will borrow money at interest and repay the interest from say taxes or bonds. This is a flow of business to the lenders.
You give employment to many many laborers, contractors, suppliers, engineers etc and they will get paid and will spend their wages , profits on things ranging from tea, snacks, digital services etc.
Suppliers who get money will spend the money on manufacturers and workers who will spend their salaries again on goods and services.
There is flow of money
With Infrastructure or New Roads or Metro Projects - It happens 10 times better
More laborers, More Engineers, More Contractors, More Suppliers, More Money and More flow of money and goods.
More financing - more business with Lenders
So making new Roads, Bridges, Infrastructure even Temples are all economically stimulating and beneficial to the economy.
Sadly here are the things that should be absolutely avoided during this phase:-
- Any Gareeb Kalyan Packages - which means money being poured into a Black hole. Since the money is not being created (By Printing), the money is coming from Banks (AIIB) and going to the mouths of the Gareeb and though the Gareeb may spend the money - the Interest has to be taken from somebodys pockets which means near zero economic mobility.
- Any Artificial Expenditure - Subsidies given to Farmers, Loan Waivers are all artificial expenditure since there is no wealth creation but tremendous loss of wealth due to loss of interest earnings. This is a disaster.
- Any Major Acquisitions in Companies like Jio - Google may pay $ 10 Billion to Reliance Jio , Facebook may pay $ 10 Billion to Jio and Amazon may pay $ 20 Billion to Jio - but while these payments may make Ambani a rich man - they wont benefit our economy since most of this wealth is in the form of US traded Google or Facebook Stock which has zero impact in india except loss of control. Instead the Govt can order (Like Trump) a piece of the business and demand that at least 33% be paid in US Dollars (Liquid) which would mean a significant chunk of Tax income which could lead to mobility.
- Any Forced Loans - Forced Loans will be an absolute disaster. A MSME who gets a Loan of 10 Crores will be able to manufacture and create jobs but he cannot sell due to poor consumer demand and slow economy and will end up with a inflated inventory and a huge NPA Debt. This will suck out and create Holes in the Economy which will be a big long term horror.
- Any Bans on Revenue Generation - Like PUBG or TikTok - Using Political stupidity on Economics would be a disaster. Like banning chinese imports would create a huge economic obstacle in tariffs, Importers will lose money, their employees will lose jobs and create a cycle of unemployment. Even PUBG is revenue for the Service Providers (Jio or Airtel) which means more money, more consumption of data bandwidth, more revenue sharing etc.
Sadly - the Modi Govt is doing exactly what they should not be doing. More and More Hotch-Potch
If they build roads or metros - It would be a big plus but instead they are messing things as usual.
Image source Google
Thanks for Reading
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