Why the government is not spending

The Indian economy is expected to contract by 10.3 per cent in the current financial year, according to the International Monetary Fund (IMF). The Reserve Bank of India (RBI) in its first forecast since the outbreak of the pandemic has projected a contraction of 9.5 per cent. Given the level of economic decline, it is reasonable to expect the government to significantly increase spending and support economic activity. 

The government, however, has refrained from making large fiscal commitments. The economic package worth over Rs 20 trillion announced earlier this year had limited fiscal outgo — that  was rightly focused on providing