Standstill economic activity and the priority to route money to rescue lives and livelihoods have severely hit the government’s expenditure on new projects in the first quarter. The government had spent Rs 5.27 lakh crore on new projects in the December quarter, which fell to Rs 3.73 lakh crore in the March quarter, and further rolled down to a mere Rs 62,000 crore in the June quarter, according to the Centre for Monitoring Indian Economy (CMIE). The number of completed projects in the first quarter also faced a major blow as projects worth only Rs 18,000 crore were completed. In the third and fourth quarters of the last fiscal, projects worth around Rs 1.7 lakh crore were completed.
While the Modi government aimed for saving lives and livelihoods amid the coronavirus pandemic-led crisis, the economic growth and the investment in the country took a severe hit. The centre’s gross fiscal deficit crossed 83 per cent of its annual budgeted target by June 2020, which was the first time in at least the last 24 years when the government had exhausted such a large proportion of its annual fiscal space within the first three months of the year itself.
With a standstill economy, the mounting fiscal deficit was a result of a major shortfall in government revenues. While the non-debt receipts nearly halved to Rs 1.5 lakh crore during April-June 2020 from Rs 2.9 lakh crore in the same quarter a year ago. Out of the overall non-debt receipts, the net tax receipts, which is the single largest contributor, fell 32.5 per cent to Rs 1.3 lakh crore.
GST collections also dropped by 35.2 per cent on-year to less than Rs 1 lakh crore during the quarter and the customs duty collections shrank by as much as 61 per cent. Meanwhile, the state-wise analysis has shown that the top 10 states accounted for 73.8 per cent of total GDP loss with Maharashtra contributing 14.2 per cent of total loss followed by Tamil Nadu (9.2 per cent) and Uttar Pradesh (8.2 per cent), said a report by Care Ratings. While the economic downturn due to the early effects of the pandemic was already strong enough to shatter the Indian economy, the rising number of cases and unavailability of clear projection of the peak have further shot up the economic woes.