Signs of a weakening public sector

States may have got more through tax transfer, but the composition of the PSU capital outlay causes concern

From a political economy perspective, the Union Budget is an important document to understand how the Centre’s fiscal relations with the states have evolved. Equally important is the way the Budget reveals the nature of the Centre’s financial engagement with public sector undertakings (PSU), which continue to play a significant role in the Indian economy, even after years of disinvestment and a few cases of privatisation. A week after Finance Minister Nirmala Sitharaman presented her fifth Budget, it would be useful to study the numbers in her annual financial statement from both these perspectives.

The Centre’s fiscal relations are principally governed