Gross value added (GVA) by public administration, defence and other services, which together comprises government spending, grew by a staggering 11.2 per cent, lifting overall GVA growth to 6.7 per cent.
But this is unlikely to be the case this time around.
According to a study by Motilal Oswal, 17 major states have budgeted for a mere 10.8 per cent rise in spending, compared with 19 per cent last year. This, as the report points out, is the slowest pace in 13 years.
As state governments together account for over 57 per cent of general government expenditure, this is likely to impact overall government spending in FY18.
The Centre has budgeted for its expenditure to grow at a mere 6.5 per cent in FY18 to Rs 21.46 lakh crore, up from Rs 20.14 lakh crore in FY17.
Motilal Oswal estimates that general government spending is likely to grow at 7.8 per cent this year, compared with 17 per cent (current prices) last year.
But there is a silver lining: The report suggests that state capex is expected to grow at a robust 14 per cent this year.
An earlier analysis of 5 state Budgets, done by Business Standard, had shown that capital expenditure by states was expected to grow robustly in FY18.
As capital spending by states put together outstrips that by the Centre, this is likely to bode well for investments at a time when there are no signs of a broadbased recovery in the private investment cycle.
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