Statsguru: 24% GDP contraction and enormity of Centre's fiscal challenge

If annual expenditure is kept unchanged from the budgeted Rs 30 trillion, a worst-case scenario can push Centre's fiscal deficit to 8.1 per cent of GDP

The grim news of a 24 per cent contraction in India’s quarterly gross domestic product (GDP) is old now. But its impact on the finances of the central government is going to linger along the year. To cushion the debilitating blow, the Centre, till July, has done its part to keep expenditure at the desired levels despite a precipitous fall in revenues. 
 

Chart 1 shows that revenue spending (minus interest outgo) has grown 17 per cent in the first four months of the financial year, against the budgeted growth of 11 per cent. Capex, however, has