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Opposing the increase in fiscal deficit due to higher capital expenditure

Published August 1, 2026 at 12:33 AM UTC

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While the government's increased capital expenditure aims to stimulate economic growth, it also leads to a higher fiscal deficit, which could have negative implications. A higher deficit may result in increased borrowing, leading to higher interest payments and potential crowding out of private investment. Additionally, sustained high deficits can lead to inflationary pressures and affect the country's credit rating. It's crucial for the government to balance the need for economic stimulus with fiscal responsibility to ensure long-term economic stability.