I am glad that HalfCentsWorth brought up in his letter the Keynesian terms 'multiplier effect' and 'leakage effect'.

When it comes to running a country, as I said in my letter , the business approach will have to be expanded to include the 'costs and benefits' analysis, rather than mere cost and income.

In evaluating mega-projects, the sources of financing must be looked into. The impact on government borrowings, the impact of the foreign content on balance of payment position and the impact on the foreign currency reserves have to be closely examined.

Once these are considered prudent only then you look into the benefits aspect. To do otherwise is to court financial disaster. There is also a limit to all these considerations. The government has to stop massive spending when it hits the 'red light'.

The plus side of large scale public spending is the multiplier effect as spending creates jobs and jobs generate income which, when spent, will create more jobs. The wheel goes around.

However, the effect will be curtailed by leakage, meaning the money spent flows out of the country. Therefore, to get maximum benefits of the 'multiplier effect', government should embark on more down-to-earth projects like building schools, housing for the lower income groups, etc.