Subhash Chandra Garg- Economy, Finance and Fiscal Policy Strategist

COVID-19 Unravelling Union Budget 2020-21- Part III FISCAL DEFICIT AND FINANCING THEREOF Budget 2020-21 Is Falling Apart Budget 2020-21 of the central government has started falling apart even when the financial year has just begun. COVID-19 has struck a massive blow to people, economy and budget. Both sides of budget- revenues and expenditures- are unravelling. The central government announced a package of Rs. 1.7 lakh crores on 26 th March. This might require about 75000-80000 crores of additional expenditure beyond what was budgeted. Programme for strengthening medical infrastructure has also been announced. There is growing chorus for more fiscal measures- for supporting businesses especially small informal businesses and millions of workers rendered jobless by the lockdown of economy. The state governments finances have suffered more and they are also demanding packages of support. The central government will sooner or later will have to address these deman...

COVID-19 Unravelling Union Budget 2020-21- Part II REFORMING EXPENDITURES Expenditure Cuts of April 8 Order Unlikely to Materialise Central government’s budgeted expenditure for 2020-21 is Rs. 30.42 lakh crores - about 15% of India’s pre-COVID-19 estimated GDP for 2020-21 of Rs. 210 lakh crores. Rs. 3.11 lakh crores of public expenditure in 2020-21 is off-budget. central government’s total estimated public expenditure for 2020-21 is of the order of Rs. 33.53 lakh crores or about 16.5% of GDP. April 8 Order exempts 17 demands under Category A from any cut. It subjects expenditures of category B ministries and departments to 20% and of category C ministries to 15% of their annual budget. The central government incurs about 30% of annual budget in the first quarter since 2017 when the budget started getting presented on 1 st Feb. At 30% run-rate the expenditure in the first quarter would be Rs. 9.25 lakh crore. If category B and C ministries and departments were to...