, || Big Decline In Government Expenditure ||
The pace of contraction of the Indian economy slowed significantly in the September quarter (Q2) and was better than estimated by most economists. However, it did not happen because of government support but despite the government pruning its expenditure, especially capex, which is considered a growth stimulant for the economy.
In Q2, Indias gross domestic product (GDP) shrank 7.5%. This was a contraction, but it was nevertheless better than the historic 23.9% contraction in Q1 and was mostly because of the surprise resilience exhibited by the industrial sector. However, government expenditure represented by public administration, defence and other services" decelerated further from -10.3% in Q1 to -12.2% in Q2.
From the demand side of GDP calculation, the squeezing of public expenditure is more evident as government final consumption expenditure contracted 22.2% in Q2 compared to a 16.4% growth in Q1. In nominal terms, this is a 1.6 trillion drop in government expenditure in Q2 from the Q1 level, including both the Centres and states expenses. This means that while the government had started unlocking the economy in June, signalling resumption of private production and consumption activities, and was announcing a raft of stimulus measures, it was actually cutting down its own budgeted expenditure instead of supporting economic recovery. It is now clear that had the government at least stuck to its pace of budgeted expenditure in Q2, the recovery in the quarter would have been faster.
https://www.livemint.com/news/india/big-decline-in-govt-capex-is-pulling-down-the-economy-11606793196752.html
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, || Big Decline In Government Expenditure || The pace of contraction of the Indian economy slowed significantly in the September quarter (Q2) and was better than estimated by most economists. However, it did not happen because of government support but despite the government pruning its expenditure, especially capex, which is considered a growth stimulant for the economy. In Q2, Indias gross domestic product (GDP) shrank 7.5%. This was a contraction, but it was nevertheless better than the historic 23.9% contraction in Q1 and was mostly because of the surprise resilience exhibited by the industrial sector. However, government expenditure represented by public administration, defence and other services" decelerated further from -10.3% in Q1 to -12.2% in Q2. From the demand side of GDP calculation, the squeezing of public expenditure is more evident as government final consumption expenditure contracted 22.2% in Q2 compared to a 16.4% growth in Q1. In nominal terms, this is a 1.6 trillion drop in government expenditure in Q2 from the Q1 level, including both the Centres and states expenses. This means that while the government had started unlocking the economy in June, signalling resumption of private production and consumption activities, and was announcing a raft of stimulus measures, it was actually cutting down its own budgeted expenditure instead of supporting economic recovery. It is now clear that had the government at least stuck to its pace of budgeted expenditure in Q2, the recovery in the quarter would have been faster. https://www.livemint.com/news/india/big-decline-in-govt-capex-is-pulling-down-the-economy-11606793196752.html
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