India Government Spending and Stimulus to be Sharply Cut

December 18th, 2010
in News, Background

New Delhi (The Economic Times):  The central government expenditure on wages and purchase of other goods and services is set to drop sharply in relative terms in 2010-11 from a year ago, indicating a reduction in the state-funded fiscal stimulus to keep the economy growing after the financial crisis. 

Follow up:

The government had stepped up expenditure to keep the economy afloat after the crisis caused a near-freeze in discretionary expenditure by both corporates and individuals.

A government analysis -- an economic and functional classification of the central government budget -- shows the government consumption expenditure, or spend on wages and salaries and commodities and services for current use, is set to drop marginally to Rs 2.24 lakh crore in 2010-11 from Rs 2.27 lakh crore in 2009-10.

The decline in the government consumption expenditure is much sharper as a percentage of GDP, dropping to 2.94% of likely GDP in 2010-11 from 3.64% of GDP in the year before, assuming the gross domestic product in the second half of the current year grows at the same rate as the first half, at 22% in terms of current prices.  Read more.....

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