Early signals for the fisc

The April-May figures show a sharp rise in external financing and spending on farm as well as rural India

Provisional actuals of the Union government’s revenue and expenditure in the first two months of the current financial year, released last week, lend greater clarity to the nature of the stress that government finances are likely to face in the coming months during 2020-21. Challenges will of course arise because of a significant widening of the fiscal deficit, compared to the Budget estimate of 3.5 per cent of gross domestic product (GDP) made in February.

But the nature of the fiscal challenge can be better understood by studying the granular details in those provisional numbers. They shed more light on the