Abstract
Pritha Mitra In India, the relationship between government investment and private investment is a controversial issue. Economic theory suggests that government investment, financed by borrowing, reduces the loanable funds available for private investment, driving up interest rates, and reducing the level of private investment. If, as Keynesians argue, the positive impact of increased government investment outweighs the negative impact of reduced private investment then economic growth will increase. In the case of India, government investment would add to the momentum of India’s growth.
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