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LATEST NEWS UPDATES | Why India faces a public funding crisis -Rathin Roy & Puja Mehra

Why India faces a public funding crisis -Rathin Roy & Puja Mehra

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published Published on Jan 23, 2020   modified Modified on Jan 23, 2020
-Livemint.com

* The Centre has no money for a stimulus package. Only the states can find a way to get India out of the slowdown

* States, taken collectively, are the only hope. Despite loan waivers, they are in a better position to boost public spending. But that would require coordinated work between the Centre?and the states

NEW DELHI:
On 1 February, finance minister Nirmala Sitharaman will present an important Union budget. The Central Statistics Office (CSO) has projected a nominal gross domestic product (GDP) growth of 7.5% in FY20, the lowest since FY09, the year in which growth had slowed due to the global financial crisis. Naturally, the expectation is that the budget will give the economy a fiscal stimulus, either through cuts in the personal income-tax rates or by substantially increasing government expenditure.

However, these hopes are seriously misplaced. Even in the absence of an ongoing economic slowdown, barely 20% of the central government’s total revenue receipts—from both tax and non-tax sources—are available in a given year for funding discretionary expenditure.

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Livemint.com, 22 January, 2020, https://www.livemint.com/news/india/why-india-faces-a-public-funding-crisis-11579624437399.html


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