Cash-strapped states threaten Modi's double-digit economic growth goal

Capital expenditure of 17 key states contracted 23.5% in the nine months to December, possibly leading to a shortfall of as much as Rs 1.8 trn in the current year's spending aim, says an economist

Prime Minister Narendra Modi’s plan to boost capital expenditure to help India regain the fastest-growing major economy title risks being derailed by the nation’s cash-strapped states, which are cutting back on such spending.
 

The nation’s 28 states, which account for about 60% of total government expenditure on infrastructure and asset creation, are hamstrung by declining tax revenue and the cost of fighting the Covid-19 pandemic. Also, unlike the Central government, states don’t have the flexibility to borrow more to maintain spending as that would lead to a fiscal deficit blowout.

“While central expenditure growth has picked up significantly over the last