Modi govt facing serious cash crunch, thanks to GST

The Union government in India is a behemoth, employing lakhs of people and responsible for collecting a lion’s share of the taxes that India’s people generate. However, this juggernaut is now slowing down. Total Union government expenditure as a proportion of the Gross Domestic Product fell from 13.9% in 2013-’14 to 12.2% in 2018-’19.

Not only is this fall significant, it is also abrupt: the Union government itself has been unable to predict it. On February 1, 2018, for example, the Union government estimated that total Union government expenditure for 2018-’19 would be 13% of the GDP, an increase from the previous year – and one that would break the falling streak.

The government’s estimate, however, was completely off the mark. Expenditure as a percentage of GDP actually fell in 2018-’19. The actual expenditure of the Centre was lower by Rs 1.31 trillion than the budget estimates.

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